Good afternoon! In today's edition, we asked five founders to tell us what no one told them about the fundraising process for their companies. Questions or comments? Send us a note at braintrust@protocol.com

Zeb EvansClickUp

Founder and CEO at ClickUp

Don't expect VCs to tell you how to run your business. That's up to you. That will always be up to you.

VCs will certainly help you with many functions. They'll ensure that you get your house in order when it comes to finance, hiring, and certainly recruiting, but they won't come in and make your business better overnight.

It's really important for founders not to overvalue a VC in that regard. You must understand what their role is — and where your responsibility lies! A VC can be a great resource, but you should still be the one with the vision.

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Edith HarbaughLaunchDarkly

CEO and co-founder at LaunchDarkly

I have been a product manager and an engineering manager, and I had never raised capital prior to starting LaunchDarkly. Now I’ve raised more than $300M, and I’ve learned no one tells you raising money should be thought of like building up a muscle.

Initially, my co-founder and I put in $10K each of our own money to buy laptops and domain names. We then turned to our friends and family, convincing past coworkers to put in anywhere from $5K to $50K. It was not easy to ask for their money, but it helped me start to build that muscle and get used to pitching LaunchDarkly. I still remember a coworker saying “I have no idea what your new company does, but I know that you’re the best product manager I worked with. You were relentless when it came to iterating on product, and I know you’ll iterate and improve your pitch.”

Building the pitching muscle did not happen overnight. I recall how our pitch at our accelerator Demo Day for our seed round was, in hindsight, grandiose. I talked about how LaunchDarkly would help software companies all over the world launch, measure and control their own software. While we are seeing that vision come to fruition today, at the time it did not land. We only had one new investor from that audience invest in our seed round, as the majority didn’t understand what LaunchDarkly would offer.

With every subsequent round, we improved how we told the LaunchDarkly story and honed in on what we heard from our customers: we were making software development faster while decreasing risk. As our customer numbers grew from 100 to 1,000 to now more than 3,000, we shared those in investor pitches. As I improved the pitch and built that muscle, our customers served as proof points simultaneously.

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Francesco SimoneschiTrueLayer

Co-founder and CEO at TrueLayer

The amount of funding a company raises sets its ambition and expected trajectory. I’m not sure first-time founders all understand that. When fundraising it’s crucial to work out the math and detail of what the numbers mean for you as the founder and for your investors, particularly when it comes to growth rate and forecasting future valuations. The key to unlocking this process is being able to find alignment between founders and investors. In my experience building TrueLayer, fundraising has been a very organic process and we always tried to put ourselves in a position of strength and partner with investors with a long term view and incredible ambition. But it requires you to think in decades and ultimately commit to build a long-lasting business. This is not common or easy. In the current funding environment, founders need to give greater consideration to the finer details of terms and conditions, too. Board seats, voting majorities, and liquidation preferences can play a bigger role as investors’ approach to funding rounds has adapted to reflect the current economic environment.

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David HsuRetool

Founder and CEO at Retool

Raising capital comes after building a great business. You need surprisingly little capital to get started. And once you have a great business, raising capital is so, so, so much easier.

Think about all stakeholders when you raise capital: your employees, your shareholders, and your customers. Your employees and shareholders will prefer lower dilution. Your employees and customers will prefer a lower valuation (such that you're more likely to be able to raise your next round).

If you have a truly incredible business (think, the chance to be the Google/Facebook of your decade) with an enormously large TAM, most metrics aren't important anymore. Investors invest because they think you have a 10% chance of being a $100 billion company, not because of how you beat last quarter by 20% or because your multiple is "cheap."

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Tracy YoungTigerEye

Co-founder and CEO at TigerEye

Time kills all deals, so timebox your fundraising. If you hear a no from investors, move on. If you hear a yes, know that the deal is not done until the money is in the bank. After you set a predetermined amount of time to fundraise, go back to real work even if there is no term sheet in hand. Fundraising is not an indication of success or failure. It signals externally that you now own less of your company. Remember that raising capital is just a financing event, so don’t fall in love with it, and don’t go into a pit of depression over it.

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See who's who in the Protocol Braintrust and browse every previous edition by category here (Updated Nov. 3, 2022).

Roku saw its revenue growth slow in Q3, and warned investors Wednesday that things are about to get worse: “A lot of Q4 ad campaigns are being canceled,” said Roku CEO Anthony Wood during the company’s Q4 earnings call. “We’re seeing lots of big categories pull back. Telecom, insurance … even toy marketers are planning on reducing their spending.”

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As a result, Roku now expects its Q4 revenue to decline by around 7.5% year-over-year. Roku’s Q3 revenue was up 15% year-over-year, but continued pressure on hardware margins and declining margins for the company’s advertising and services business led to a net loss of $122 million. In Q3 of 2021, Roku generated close to $69 million in net income.

Roku is an interesting test case for both consumer electronics and the general video ad market. The company sells its own hardware, but generates the vast majority of its money with advertising. Both sectors typically see a major cash influx in Q4, but Roku executives warned that things will be different this time around.

“This is not a normal holiday season,” Wood said. He also insisted that marketers were pulling back across the board. “They are not spending with anyone,” Wood said. However, he expressed optimism that advertisers would move even more of their budgets to streaming once the worst of the current crisis is over. “We expect to emerge from the current advertising downturn stronger and in a better position than ever,” Wood said.

Roku recently expanded beyond streaming with the launch of its own line of smart home products, which are being manufactured by Wyze Labs. “That was a cost-efficient and expeditious way to enter that market,” Roku CFO Steve Louden told Protocol Wednesday afternoon. “We're hoping that it does give us an opportunity to leverage [it] into a growing market over time.”

Green jobs and corporate climate pledges abound, but skilled sustainability professionals are scarce.

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A new report from Microsoft and the Boston Consulting Group on “closing the sustainability skills gap” found that 57% of sustainability professionals lacked a sustainability-related degree, and that more than 40% had no more than three years of sustainability experience.

“The historical importance and current breadth of the sustainability skilling challenge are difficult to overstate,” Brad Smith, Microsoft’s vice chair and president, writes in the report. “The creation of a net-zero planet will require that sustainability science spreads into every sector of the economy.”

The job opportunities are increasing: Green jobs grew 8% per year between 2016 and 2021, according to the LinkedIn Green Jobs report. But the talent pool lagged, only growing at 6%, according to LinkedIn. Scientists are leaving academia and engineers are leaving Big Tech in order to work on climate tech, but that might not be enough to fill the widening gap.

According to the Microsoft report, more than two-thirds of sustainability leaders were internal hires. Out of a list of the 10 most commonly held jobs prior to becoming sustainability managers, four (business operation roles, program manager, quality assurance manager, and customer service representative) were unrelated to sustainability. Yet “talented insiders” without formal training are not a sustainable talent pool, the report argues.

Data and digital skills, sustainability-specific competencies such as carbon accounting and reporting, and transformational skills — including broad stakeholder management and culture and change management — were the major skill areas that sustainability pros need, the report found.

But more work is needed from employers, governments, and educational institutions to identify and fill these skills gaps, both in the current workforce and at schools: including K-12, college, vocational programs, and apprenticeships. The report outlines a three-part action plan, including initiatives Microsoft itself is undertaking.

Correction: An earlier version of this story misdated the first year that green job growth was tracked. This story was updated on Nov. 2, 2022.

Green jobs and corporate climate pledges abound, but skilled sustainability professionals are scarce.

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A new report from Microsoft and the Boston Consulting Group on “closing the sustainability skills gap” found that 57% of sustainability professionals lacked a sustainability-related degree, and that more than 40% had no more than three years of sustainability experience.

“The historical importance and current breadth of the sustainability skilling challenge are difficult to overstate,” Brad Smith, Microsoft’s vice chair and president, writes in the report. “The creation of a net-zero planet will require that sustainability science spreads into every sector of the economy.”

The jobs opportunities are increasing — green jobs grew 8% per year between 2015 and 2021, according to the LinkedIn Green Jobs report. But the talent pool lagged, only growing at 6%, according to LinkedIn. Scientists are leaving academia and engineers are leaving big tech in order to work on climate tech, but that might not be enough to fill the widening gap.

According to the Microsoft report, more than two-thirds of sustainability leaders were internal hires. Out of a list of the 10 most commonly held jobs prior to becoming sustainability managers, four (business operation roles, program manager, quality assurance manager, customer service rep) were unrelated to sustainability. Yet “talented insiders” without formal training are not a sustainable talent pool, the report argues.

Data and digital skills, sustainability-specific competencies such as carbon accounting and reporting, and transformational skills — including broad stakeholder management and culture and change management — were the major skill areas that sustainability pros need, the report found.

But more work is needed from employers, governments, and educational institutions to identify and fill these skills gaps, both in the current workforce and at schools, from K-12 to college, vocational programs and apprenticeships. The report outlines a three-part action plan, including initiatives Microsoft itself is undertaking.

Robinhood reported a drop in third-quarter revenue but also a narrower loss on Wednesday, in a sign that it might be stabilizing its business as it attempts to recover from a staggering drop in the stock and crypto trading activity that fueled its growth.

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The company’s shares rose in after-hours trading. Robinhood posted a loss of 20 cents a share on revenue of $361 million, compared to a loss of $2.06 a share on revenue of $365 million in the year-ago quarter.

Financial analysts had expected a loss of 33 cents a share on revenue of $372 million, according to Zacks.

But the company said its adjusted earnings were $47 million, up $127 million from the second quarter.

Robinhood reported a 12% sequential decline in operating expenses, in an apparent sign that recent cost-cutting measures, including major layoffs, are paying off. Revenue actually rose 14% from the previous quarter.

But the company’s crypto business, an area on which Robinhood had increasingly focused, remains sluggish. Transaction-based revenue for crypto fell 12% sequentially to $51 million.

Still, CEO Vlad Tenev said the company “achieved our goal of reaching adjusted EBITDA profitability, a quarter earlier than planned.”

Robinhood has been reeling from increasingly downbeat views of its ability to become profitable more than a year after its IPO.

The economic downturn has hurt its ability to attract more users, which remains a problem. The company said its monthly active users fell 1.8 million sequentially to 12.2 million in September “as customers continued to navigate the volatile market environment.”