This article by Alejandro Cremades originally appeared in Forbes on August 8, 2019.
Tim Hwang cold emailed Mark Cuban to fund his big data startup, FiscalNote, at just 21 years old.
Startup fundraising can often feel like a long hard process for many founders. Tim Hwang aced it, with an email that got Shark Tank’s Mark Cuban’s attention. They’re now a powerful global tech company.
Tim Hwang recently appeared as a guest on the DealMakers Podcast. During his exclusive interview, he shared his strategy to growth by acquiring other ventures, his take on artificial intelligence, strategies to raise capital, and tips around getting a response when cold-emailing prominent people.
Becoming a Part of the Fastest Growing Startup in History
In search of the American dream and land of opportunity, Hwang’s parents immigrated to the US from South Korea when Tim was still very young.
His father ended up working for the government, including NIH and NIST as a biophysicist. They moved to Washington DC to be at the center of government. A place where everyone lives and breathes politics all day. It was contagious.
At just 16 years old he was working on political campaigns, and working with different candidates. He ended up working on the campaign for a little known candidate in 2007, who ended up becoming former president Barack Obama.
They went from just a handful of people to all 50 states and trying to set up a government at the same time. Taking a candidate like that and propelling them to that status is what this founder describes as the largest and fastest-growing startup in American history.
At 17 years old Hwang decided to throw his own hat into the ring. He ran for the board of education for Montgomery County, Maryland. People voted for him.
He got elected and was tasked with managing a $2.5 million operating budget, $4 billion capital budget, and with serving 22,000 teachers as well as 11,000 administrators.
Tim became fascinated by this emerging intersection between politics and technology and the way in which citizens interact with public institutions.
He was inspired to make a difference early and recognized that this legal and political arena was one of the most powerful ways to have a massive impact fast.
During his political career, he worked to revamp the communications architecture and interactions with the public.
He would spend time traveling to the 200 schools in his district to meet as many parents, teachers, administrators, and students as possible, and to learn and get feedback from the 1.1 million residents in his district.
All of this obviously being a great foundation for what it takes to craft a great startup company.
While anticipating going to work in politics, Tim noticed how tech companies were building software tools that were getting rolled out in months making an impact on the lives of millions of people. A stark contrast to the years it can take to wield change through legislation and government.
He also saw how inefficient Washington DC can be. Teams upon teams of people huddled in offices trying to figure out what is happening in other areas of government and what the state and local laws are in other jurisdictions, and their impact.
So, having studied computer science at Princeton’s Woodrow Wilson School, Tim Hwang got accepted to Harvard Business School.
He showed up for a few days. Then decided he wanted to start a company instead and dropped out of the program.
He grabbed some friends and headed out to Silicon Valley, just as any aspiring young entrepreneur does.
Discovering how expensive and impossible it is to find a place in the Valley, they set up home and their first office in a Motel 6 room.
They bootstrapped with money from summer jobs, eating ramen noodles and sleeping up to five people in a single room.
They worked crazy hours and coded from early morning to 2 am the next morning, seven days a week. They talked to hundreds of potential B2B customers to make sure they would get the product right.
They ultimately developed a system and product that would codify all of the laws in different jurisdictions at different levels into a easily searchable database and suite of tools.
Cold Emails & Fundraising
Tim sent a cold email to Mark Cuban, owner of the Dallas Mavericks and Shark Tank‘s star. To his surprise, Cuban replied in just 45 minutes. They traded a couple more emails and Cuban said he would be their lead investor. Along with Jerry Yang, the founder of Yahoo, and NEA, that seed round grew to $1.3 million.
They’ve gone on to raise over $230 million for the company from other investors such as Plug and Play, AME Cloud Ventures, QueensBridge Venture Partners, Dorm Room Fund, Winklevoss Capital, Middleland Capital, Visionnaire Ventures, or 645 Ventures to name a few.
Storytelling is everything in fundraising and FiscalNote was able to master this. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
What the Best Investors Have in Common
Tim says the three traits he’s experienced in the best investors are:
1. Those who are also great coaches and are excited about the venture
2. Those who also have experience in the things you are pursuing
3. Are fully aligned with management teams in terms of the outcomes they want to see, and timelines
The Challenges of Scale
More recently FiscalNote has begun acquiring companies, with acquisitions that were worth up to $180 million.
They’re now a global service which counts every member of the House and the Senate and the United States Congress as their customers, as well as major corporations, trade associations, and nonprofits.
They have 500 people on their team and expect to double over the next 18 months or so.
After experiencing this level of growth, the top three challenges of scaling according to Tim are:
- Staying true to your culture when you start to scale
- International expansion
- Making decisions while balancing competing priorities, as there's always a tradeoff
Listen in to the full podcast episode to find out more, including:
- The biggest opportunities in digital transformation and automation
- Net retention and whose job it is to keep customers
- What a powerful cold email looks like
- The most important piece of advice when starting a company