Startup Funding Tips: VC Insights from Clarence Bethea at True Ventures

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Hello, everyone.

I am one of your co hosts for today's interviews, Chris Walton.

And I'm Anne Mazinga.

And we are pleased to introduce investor and executive in residence at True Ventures, Clarence Bethea.

Clarence, thank you for joining us and welcome to Omnitalk.

Thank you so much for having me.

We're excited to have you.

Thanks for taking time to join us today.

I'd love to start by just giving an audience, our audience, a quick background on you, especially going from startup entrepreneur to now working for a vc.

So maybe start there, if you don't mind.

Yeah, so the joke I make to people is that if we go back a little bit further, I'm your most like non traditional VC founder guy that you've ever met.

Why is that?

You know, I, I, my background is not entrepreneurship, my background is not vc.

I'm from a place called Decatur, Georgia, right outside Atlanta.

And my whole background was doing all the wrong things.

And so I, I, I, I, as a young adult, I met the CEO of Best Buy who changed my life.

And you know, that is how I kind of got to where I'm at today.

Oh, my God.

Tell us a little bit about that story, Clarence, if you don't mind.

Give the audience the quick snippet because I heard it when I first met you and I think it's a great introduction to you for, for the audience.

Yeah.

So, yeah, I'm from the streets of the K, Georgia, grew up doing all the wrong things, in and out of juvenile, in and out of jail, just making all the mistakes that a young man from that area of the town makes.

And in my late 20s, I was working at a basketball gym.

And just by having chance, the COO who ended up becoming CEO of Best Buy took a liking to me.

And we met and he said he wanted to mentor me.

And it just gave me a lot of confidence into what I thought I could become as a young man.

And.

And, you know, that relationship spanned it for about eight years.

And he just gave me experiences.

I say that was a real life MBA experience, you know, happening every day.

And that led me to starting my own company.

And that company doing.

Doing all right.

And I ended up here, where I'm at today, being a vc.

And what was that company, Clarence?

What was that company?

What did it do?

What does it do?

Yeah, so the company called Upsie.

So I'm sure you both walked into a Best Buy, you check out, and at the register, they say, hey, would you like a warranty with this, with this product?

Well, what most consumers don't understand is that that warranty is marked up as much as 900%.

So you could buy the warranty for $400 and it could cost $50 from the insurance company.

And I saw that problem, you know, in the early 2010s, and said, hey, what if we created a product that made it more affordable, more transparent, and made its service much better for consumers?

And I started the company.

I had no clue about starting a company.

I had no clue what pack or LTV or any of that meant.

What I.

All I knew was that I wanted to create something that felt like it was benefiting the consumer.

And that led me to Upsie.

And, you know, we raised over $30 million in venture capital.

We exited the company last year, and that's led me to the VC side of the table.

Yeah, it's kind of a baptism by fire then into entrepreneurship and the VC world.

So.

All right, so then.

So you mentioned.

So, so now you've linked up with True Ventures.

You're kind of an executive in residence as well as an investor.

So.

So tell us about True Ventures first.

And then also I want to know, like, where does it focus its investments and how do you help with that?

Yeah, so True Ventures have been around since 2005.

Our founders are still very, very, very active today.

We are re industry agnostic.

So we invest across everything.

So you can say we got people making meat in bags and growing meat all the way to your kind of your stereotypical SaaS companies.

Some of our companies, Peloton, Fitbit, Duo Security, Hashicorp, Goodreads, those are some companies where we were very, very early into those companies.

So we had a lot of wins.

But we are on a new, exciting trail with AI.

Our latest fund was close to $900 million.

So that is all seed stage investing.

So 1 to 4 ish million dollar checks into the future of, of, of entrepreneurship.

And so we, we have a team of about 50 people, 25 of those people are on the investment team with, with, with me.

And we really just try to make sure we focus on people and then the, the, you know, the business stuff will work itself out.

Well, Clarence, you mentioned AI being a focus, but are there any other areas that are kind of, of particular interest right now or maybe like on the flip side, anything that you're not interested in investing in or that true ven.

Like staying away from?

Yeah, so we, we believe, and one of our partners Rohit said this, we believe that AI is going to infiltrate every single industry.

So today if you're not working with AI, if you're not thinking about how AI will affect your business in the future, I, I don't know if we're very interested.

Right.

So because it could be the most boring business and AI is going to play a huge role in how that business move forward.

So you have to be looking at AI in all of the pitches you're getting or the companies need to be in the pitches you're getting.

The companies have to be looking at AI because it's such a disruptive technology that if you're not accounting for it, you could be obsoleted down the road.

Is that right?

Totally.

I mean even if you're not technically an AI company today, but if you're not looking at AI tools that can make your business more efficient, you know, we have a company in our portfolio, one of the largest beauty brands in the world.

They are using AI to help with customer service and it is showing like major, major savings and efficiency for the business.

So even if you're not an AI native business, you should be thinking about how AI plays a role in helping you become more efficient as a business.

Yeah, it's almost like you need to say like you're staying out.

Like the more notable thing is maybe if you're not using AI, like you're a homegrown, like you're growing meat in a bag or something.

Like you said, said like this is something where you would call that out more than like every.

It just should just be assumed at this point that you're using AI if you are looking for investment.

Exactly.

Yep.

You can probably even figure out a way to use AI for meat in a bag too.

I know.

As I was saying that I was like this is probably ridiculous.

There's many ways you could probably see efficiencies there too in today's day world.

So.

So then True Ventures.

So the idea then with that fund you mentioned is like really seed stage getting in early and investing early to find the next companies that will break through in that AI space.

Yeah.

So we're one of the few, like true, true C stages.

Like we're not a big fund that says we're going to invest across all of the stages.

We're really focused on that early stage.

And I think what that allows us is it allows us a breadth of knowledge that a lot of people don't have because we've been at the early stages.

So we have a sympathy, a sense of empathy that a lot of people just don't have the early stage, like you.

You don't need to come to us and tell us you're CAC and ltv, because we know.

You should know it.

Right.

You shouldn't know it.

Right, Right.

Yeah.

There's a lot of businesses who come to us and they are, they don't have the product flushed out or they don't have the team flushed out or we're not asking them for five years projections because we understand right now is you're making a bet on the founder and CEO.

Got it.

And hence the role you're playing.

So back down's question that is there, are there any areas that you, that, that you and True Ventures are particularly staying away from right now too?

No.

You know the joke I make internally that if you put AI in front of anything, like I'm making AI loaves of bread, we'll take a look.

It'Ll get a review.

That's what you're telling me.

All right, listening.

Yeah.

Hence why we see AI on every company's name out there right now.

Right.

So.

All right.

So one other topic that I want to talk to you about too, and I know it's something you're particularly passionate about, is inspiring people to be successful.

And you've kind of touched on it a little bit there in your last answer too, in terms of helping those early stage entrepreneurs understand, you know, what, what the whole starting a business is all about.

So, so I'm curious, I want to get more into that.

So how do you approach doing that in your day to day job now?

I, I think it goes back to empathy.

Right.

Like being a former founder, having gone through the trenches of, you know, before I got my first.

Yes, an investor check, I had to pitch 153 notes.

So when you go through that journey and you understand what that journey looks like there's a simple sense of empathy that I think I just have.

And so I try to do two things with founders.

I try to be empathetic and I try to be honest because I think both in VC are missing.

People often don't tell you the truth because they don't want to hurt your feelings and then not have a chance to invest in you later if you blow up.

Empathy comes from, you know, having gone through it.

And so that is where I find myself a lot of times with founders and even with, you know, VCs, like, hey, we need to make sure that we are treating this founder because they're already going through hell.

Like, we don't want them to go through that with us.

And so we really, really try to anchor in on making sure we're being honest and empathetic with founders.

So, Clarence, I, you mentioned empathy and I'd love for you to talk a little bit about, you know, even in your own experience when you were starting your company, what do you think really needs to happen right now to give these entrepreneurs a shot at success?

I mean, I love, I mean one example that I think of is like we hear from all of these retailers, they're like setting aside space, space or we're going to have the startup area or the small business, you know, we're going to invest in bringing X number of small businesses into our massive retail store, you know, as a start to them.

Is that helpful?

Is it causing more problems?

Like maybe just kind of give us a state of, the state of what you think, like the next best path is for a lot of these startup entrepreneurs right now.

Yeah.

So no disrespect to makeup, but that's all just makeup, right?

Yeah, it's just makeup.

Right.

Like, yeah, like we, we saw in the George Floyd era where a bunch of people made promises and it was like a trillion dollars worth of promises made and you know, barely any of them happened.

I think a lot of that, you know, let's create extra shelf space and let's, let's do that kind of stuff is just makeup.

I think the truth is most founders are over mentored and underfunded.

So what we need to do is put money, money in the hands of creators and let them create right.

And let them earn their way on the shelf.

But a lot of times, especially for black founders and women founders, we just don't even get the opportunity to get started.

Right.

And that is where a lot of our focus comes in.

What kind of areas of investment are important?

Because I've been hearing that from a lot of especially like, you know, brand rep groups who are trying to bring these brands from early startup stage into retailers.

What, what kind of investments are you seeing are most critical for them to be able to get funded?

Like where are those areas that they need funding to focus on?

Is it like in development stage?

Is it in retail media investment?

Like where, where is that, that area that you're seeing?

Most founders need help.

Yeah.

In our business we call it the friends and family round.

Right.

That's where you know, your rich uncle gives you 150 grand to get started.

Right.

The truth is I need one of those rich uncles.

Right.

But yeah, but that's really interesting because that is where a lot of the early stage money comes from is from people that have rich uncles and not everyone does.

Right.

That's what you say, right Clarence?

Yeah, exactly.

And, and most people just don't have the rich uncle that says, you know, here's some money, here's some buddies.

Right.

That's money.

So you can try this idea out.

Right.

And, and so I think it's really important that we focus in on those early checks like most people think the, the multimillion dollar check is, is the right one.

And truly, sometimes people just need the $200,000 check to get started.

Yeah.

Yeah.

Great.

So, so how do we go about doing that?

Like how, how what, like what, what, what needs to happen collectively to make that type of, I guess, you know, friends and family round type money more available to more, let's say women and black entrepreneurs as an example.

Yeah.

So I think it's twofold, I think for folks like us as true.

And we're working on this internally, working on products that allow us to be earlier.

Right.

And get away a little bit from our norm that we've been over the last 19, 20 years.

But then I think there's the other side of the coin, which is we need to help entrepreneurs get the information they need to be better at what they do.

So we always talk about there's an information gap and I see it a lot sitting in my seat is that I will see a black founder or woman founder come in and they will really struggle with their pitch, what they supposed to say, how we want to see it.

And so a lot of times that blocks us from being able to even take it serious.

Because if you come to a pitch, and I give you an example, if you come to a pitch, and oftentimes black founders and women founders are credentializing themselves and it takes like 10 minutes.

Right.

They want to say, I have a PhD, I've done this, I've done that, I'm.

And it's like 10 minutes of a 30 minute phone call and you're like, I don't need to talk about you for 10 minutes.

Like, tell me what you've done.

Let's move on, let's get to the problem.

And oftentimes, because of the way this industry has gone black, founders, women founders are taught to come in and credentialize yourself as much as possible.

And I tell them, like, no, you don't need to do that.

Like, if you got a PhD, all you need to do is tell us, I got a PhD, that is good enough.

Let's move on to the problem.

Conversely, if most white founders that come in, especially white CIS males that come in, they come in and they're telling you, I am building a trillion dollar company.

This is the best thing that ever happened to you and you would be lucky to invest in me.

Right.

And so just even that confidence, you're like, I want to give this person money.

Right, right, right.

Because our business is helping companies build businesses so we make money.

Right, right.

And so little things like that is what I try to encourage founders.

You don't need to do that.

Like, come in with all the confidence, come in knowing your stuff and like, give us a chance to look at the real business and not just about yourself.

So, Clarence, I want to ask you too, so, so how do you activate this then?

Like, how do you act?

I mean, you know, different communities, different municipalities have different areas or centers of entrepreneurship.

How do you activate this, say throughout the country?

Like, what, what efforts do you think need to be taken there?

Yeah, I don't know if there's like a real solve nationally.

Okay.

I think I have to do the work.

You have to do the work.

And you, like, we all individually have to do the work on our side.

I think to create a national movement, it's just not realistic in our space.

But so every entrepreneur I try to touch, I try to make sure that I'm honest and empathetic towards them so that they see this.

Got it.

So your real takeaway though, is that we need more of the early money going to these entrepreneurs to help them out.

That's.

That's your big message here, correct?

Clarence, do you find that there's, there's like, where, where is there access to that early money?

I mean, true ventures, obviously, being someone who's empathetic and can understand and be honest with some of these founders.

But are there other places out there that you'd recommend people listening, kind of explore or any, I guess, anything that you have them ask or look out for as they're going to get first round of funding?

Yeah.

So I have a saying that there's three people as an entrepreneur that you need in your life.

If you don't have all three people, you're going to struggle, especially today.

The.

The first person is somebody ahead of you.

So if I want to raise a million dollars, I need to be mentored by somebody who, who has raised a million dollars or more dollars.

Right.

So, yeah, I can understand good advice, like how they did it.

Right.

The second person is somebody behind me.

So if I raised a million dollars, I need to be turning back and helping the next generation of founders, showing them, hey, here's what you're going to need to be able to show in order to raise a million dollars.

Because I think it's really unfair to take from people in front of you and not give back to people behind you.

And the third person is probably the most important.

You need somebody at your same level who has, who is going through the trenches with you, who their company is at near the same spot as yours that you can call at 1:00 in the morning and say, hey, I am really tired.

I don't know if I can do this anymore.

My wife is yelling at me, my husband is yelling at me, and I go get a reg job.

Like all these things are happening.

You really need that person there to, to sanity check you.

Because if you don't, I can tell you I've.

And I've seen it multiple times.

You can get in a really bad place and, and not trust these other ends of people because you're like, they don't know how I feel.

Yeah.

Yeah.

And when you know that this person is going through the same thing, I got a guy named Harold Hughes who ran a company called Bandwagon.

He was that for me.

We would call each other 1:00 in the morning, crying, like, I can't do this anymore.

And I think those three people, if you get those three people in your life, it will help you kind of navigate because people in front of you will introduce you to their people.

Right.

Like they will.

They like you.

Hey, this investor who invested in me.

And it kind of all works itself out.

Yeah.

So it's like building your board of directors as an entrepreneur, those people that you can go to versus like a place that you're going to.

To get you know, resources that.

That's building the community.

It sounds like that will help you get to the.

The money that you need.

Yes.

I had one more question for you real quick, because you made me think of something as you were just explaining that.

How do you.

If.

If you're my person that I'm calling at 1:00 in the morning, Clarence, how do you advise those listening when they're.

They're.

They're doing an entrepreneurial venture?

How do you advise them to think about the Runway that they give themselves to see through an idea or even the questions that they should be asking themselves along the way of, like, when those creeping thoughts of like, I need to go get a job or this isn't going to work, like, how do you advise them to kind of consider, like, look, you got to give yourself a real a year to prove out this idea, or you got to give yourself six more months to do this.

Like, what.

What kind of, like, guidelines do you have for that situation?

Yeah.

So great question.

I'm not going to give you the answer you think I'm about to give you.

All right, Even better.

I was crazy and fanatical about being a company.

There was no timeline.

There was no, I'm giving myself this amount of time to do it right.

I was all about.

I was willing to sacrifice everything.

And this is gonna sound harsh, but I was willing to sacrifice my marriage.

I was really sacrifice.

Friends.

Like, everything was on the table because I had this vision about what I thought the future should look like.

And so my answer to that question is always, most of the time, when you're going through things and things are hard, you're about to have a breakthrough.

And mine was.

I remember vividly, my wife told me in October of 2016, you are done in, in.

At the end of December, you're done.

You're gonna go get a job at Target.

Her exact words to me, you're gonna go stock shelves at Target.

If we don't get a sign that this thing is going in a different direction, you are done.

Because you have a family you need to take care of.

And I remember, I was like, whatever.

Like, I just divorce you in December.

We'll move on, right?

Like, Like, I.

I was seriously, I was like, I am going to chase this thing down.

And I think that, like, God, is so amazing, because in December, an investor approached me and said, hey, I want to give you 100k.

And it kind of started off the road for me.

And so, like, I don't believe in balance.

I don't believe that you should put timeline.

Like, if you believe in this vision, you should sacrifice it all.

You should mortgage the house.

You should do it all.

If you really believe in it.

Yeah.

Until you.

Until there's a point maybe where you don't believe in it.

Right.

Because at some point.

Yeah, that point.

But that's your thing.

It's like you have an unwavering commitment to it until you just no longer can.

And that's your trigger for I need to get out of this.

Yeah.

And that just never happened for you.

It sounded like.

Like you were just still believing in yourself and the idea that you could make it happen.

And that's.

Yeah, that's good.

Yeah.

And I think most people have an easy breaking point.

And this entrepreneurship will test you.

It will test you and make you break.

And I just think, like, if you want to do this the right way, you can't break at the slightest hint of something going wrong.

Like, you got to keep going.

And that was the one thing I was going to ask you to close us out.

Because, you know, I imagine as you've been sharing these lessons, I imagine and.

And these kind of frameworks and rubrics that you've been talking about, I imagine those were learned from your years of.

Of doing this.

So I'm curious.

I'm sure you've been asked this before, but as you look back, is there anything you wish you'd done differently or wish you knew then that, you know, now, you know, experience isn't something you have until after you need?

It is one thing that we always say.

So.

So what was that for you?

Yeah, I.

I don't regret.

I.

I wouldn't do anything different because it ended up, you know, ended up working out for me in a way that I didn't even believe was possible.

I believe that adversity is a gift, and so I would go through all that adversity again if I knew.

Yeah.

This is where I was going.

So.

No, no regrets here.

Got it.

Got it.

But was it.

Was there any.

I.

I totally buy into the whole no regrets thing, too, because that's kind of the philosophy we live by, too.

But I'm curious.

Was there any.

Like, when you said.

When you said, like, you know, have these three people in your life, did you have them, you know, with you at every step?

Or did you, like, was there a time where you're like, oh, shoot, I wish I had had, you know, this person who had gone through, you know, raising money with me before, some other example like that?

Yeah, I mean, I, again, I think you, I go back to, like, everything happens for a reason.

And especially when I look at my life, I've been so fortunate.

Like, and, and I, the, the, the comedy I make most people is like, I'm living a life that I don't deserve.

And I am fortunate and blessed and God has blessed my life and my family, and I don't, like, I don't deserve to be here.

I got really, really lucky.

So when I look back at things like that, I say, you know what?

Like, people came in and out of my life at times where it made sense, right?

And they left my life at a time that it made sense.

And I'm, I'm grateful for their, you know, their moment in my life right now.

I hope they got, they see the same thing about me.

Got it.

Well, Clarence, I cannot tell you how much we appreciate your honesty in this conversation.

Like, you say it and you do it.

You're walking the walk.

It was wonderful.

I really appreciate your perspective, especially in our ongoing conversations here at OmniTalk.

If people want to get in touch with you, they want to learn more, you might be that person that they call in The Future at 1:00 in the morning.

What is the best way for them to get into touch with you?

Yeah, I mean, you can email me.

Just clarence.

True ventures.com is my email address.

And I'm on, you know, Twitter, Instagram, all just Clarence.

Underscore Bethea.

Excellent.

Awesome.

Well, that wraps us up.

Thanks again to Clarence Bethia of True Ventures for sitting down with us today.

And thanks to everyone out there for listening in to this episode of our ongoing series on VC perspectives across the retail and consumer goods industries.

Please let us know what you thought of our interview with Clarence on social media.

Let us know also how we can do better.

And as always, on behalf of all of us at Omnitalk Retail, be careful out there.