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David Chang joined Freddie Laker for the 100th ever episode of the Oh Ship! show. As a serial entrepreneur, prolific angel investor, educator, and currently general manager of executive recruiting firm Hunt Club, he has a vast array of experience to draw from. He’s invested in 97 startups and has been an entrepreneur in residence at Harvard Business School. In his chat with Freddie, David shared valuable guidance on knowing when to raise, stay, or fold at key business moments. 

What draws him to the startup space?

“My favorite part of working at a startup is working with a team of people, working toward a common goal,” David says. “I just love being in the trenches with a group of other people.”

With Hunt Club, that means pioneering a new model for executive recruitment with his team. While the typical executive recruitment firm taps into candidates in their immediate network, Hunt Club uses a mix of technology and human connections within a network of 17,000 industry leaders, whom they incentivize to share leads.

David has been part of six startups in total, but he thinks about Where Angel Fund the most. “It really felt like a team where we had a tremendously deep bench,” he said. “We know how to just divide and conquer.” 

He thrives on working with startups at a stage where they need to cross a wide chasm between where they are and what they’re capable of becoming within a short time. Picking the right people at the right time to make that happen is one of his strengths.

Over time, he’s worked with many of the same people in different startups. It’s almost like a family, he says. “If you can get the band back together … it’s a ridiculous shortcut,” he remarks.

Oh Ship! moments

Just before Instagram came out, David was involved with a mobile photo-sharing startup. It felt like things were taking off, with people around the world using the tool. But they needed to lower their customer acquisition cost enough to generate positive revenue, and they were about 4X off. They were spending $100,000 a month on ads, but something had failed, and it took a while to realize their estimations were off. “The actual organic behavior of consumers was so far off that the 4X was closer to like 20X,” David says. 

“We were so far off the business that this was beyond ‘pivot,’” David continues. “It wasn’t even like, ‘hey, let’s do something different.’ It was like, ‘We don’t have a business.’”

They switched from a B2C model to a B2B, recruited a new CEO, and changed the business entirely—which meant laying off half the company. Including David, who opted, as cofounder, to let himself go.

He wondered if anyone would invest money in his ideas again. 

“I guess my lesson was, failure’s part of it. Things go on. People understand,” he says.

He learned a few other lessons from that experience, too: “We shouldn’t have put all of the eggs in that basket so early on, and we were just so convinced that we were right,” he says. “What I would do differently would be iterate faster, test and learn.”

Knowing when to raise, hold, or fold

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Understanding whether to raise, hold, or fold at the right point is crucial, David emphasizes. “It is like a high-stakes game of poker,” he asserts.

“There are these points in the business where you have to figure out where to go,” he continues. “At every one of these inflection points, you have to figure out … do you raise more money and kind of double down; do you stay the course and keep in a place where things are just all going smoothly?” he explains. “Or do you fold … meaning, do you sell out, do you exit the business?”

“As a founder, as an entrepreneur, I think you want to keep all three of those options open and look to see which of those three at this particular moment in time is best for the business,” he notes.

What will raising money be like in 2023?

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David has a deep well of experience in raising funds. All of his startups were venture-backed, and together, these 6 ventures raised about $150 million in total in venture capital, then sold for about $750 million, for about 5X return. 

The default mode is to keep raising, especially in the venture-backed world, he notes. Founders are always asking him, “Who should I talk to; how should I position it?” They’re primarily interested in how to put more chips on the table.

Angel spending tracks closely to institutional spending, oddly enough, he continues. “Most of the angels … even our own angel group, have seen volumes go down by quite a bit,” he notes, referring to the current investing climate. “You look at your overall network, and you allocate X percent of it to alternative investments and early-stage startups,” he explains, describing how angels make decisions. “When you write that check, you shouldn’t expect to see it back.”

Despite the doom-and-gloom narrative we often see in the media, he’s cautiously optimistic, he says, noting that venture capital cycles are somewhat disconnected from the broader capital markets. Investors are still out there; conversations just last longer and you have to talk to more people—and be more careful with your capital. 

“It will be more work, but you can still get it done,” he emphasizes. 

David shares this advice for founders in 2023: “You should continue to pursue value-added individuals that know your space, you should continue to pursue institutional VCs that also understand your space, and know that it will likely take a little bit longer.” This may lead you to consider the stay or hold option, considering how you can bootstrap or extend funding to weather the storm. 

Common mistakes in raising funds

One mistake David says he’s made is not thinking big enough. “I was going in and pitching, ‘Oh, if you get 2X your money back, isn’t that a great return?’” he remarks. With institutional investors, it needs to be more like a 10X return. 

“First-time founders also have the challenge of holding the idea too closely, thinking the idea is everything,” he says. “After you’ve done it for a little while, and you’ve done a few startups, you know it really is about the team execution.” Sometimes first-time founders don’t want to talk about their idea, but this prevents them from getting the people they need on board.

There’s a well-tested fundraising playbook, he says. He calls it the ABCs of fundraising:

  • Decide which investors you want to target.
  • Break down the barriers between yourself and these investors.
  • Generate FOMO to close the deal.

One common mistake people make is jumping right to the ask. This changes the whole dynamic. “If I’ve never met you before, the likelihood that I’ll write a check is just really small, and it starts a shot clock that you don’t want to start, and so that’s probably the biggest mistake,” he says. It skips over the social aspects—and the FOMO.

The FOMO plays an essential role in generating momentum. “It’s really hard for an investor to write that check if they think that there’s going to be more time or other ways that they can improve the ROI of their own investment by giving you another homework assignment,” he asserts. Successfully creating that FOMO can lead to quick action. One founder he had invested in asked an institutional investor after a 20-minute call, “What’s the smallest check you can write?” And they wired $500,000 by the end of the day. 

Be ready to sign contracts when you start pursuing funding, Freddie urges. A lot of founders go out and get people pumped up before they have all their ducks in a row, and then they’re unprepared to move in that moment of excitement—and investors may then move on.

When should entrepreneurs stay the course?

David shares his take on the concept of stay—keeping a business going without raising more money.

If raising funds isn’t currently a great option, either because you haven’t found optimal investors or because of tough market conditions, staying on the current path may look more attractive. In that case, you can focus on finessing operations, focusing on customers, and getting creative about new product offerings, David says. “Founders get pushed toward, or they feel pressure to take, the raise option—but as an operator, the ‘stay-the-course,’ ‘build-the-business’ is actually your main muscle,” he emphasizes.

How can entrepreneurs know when it’s time to fold?

The good news is, you can evaluate the raise and the sell at the same time—or even explore both options among investors, David asserts. For both, you’re working to illustrate the value of the company, so the materials you prepare will be similar. 

With one startup, his team was debating on whether to raise another $40 million round of funding or to sell. “We simultaneously lined up a bunch of next-round investors, next-series investors, and also had a pretty strategic process around looking for potential buyers at that moment,” he says. They ended up selling but used the same process of talking with investors.

As time goes on, you’ll keep cresting one wave and reevaluating the best course of action. If you’re not happy with the term sheet and investors, pursue a different path. “Then, when the business changes or the market changes in six months, you reevaluate those three options again,” David says. It’s tough to plan too far out, he notes, adding, “It’s hard to see where the ship is gonna be in three years’ time.”

Find David on Twitter: @changds or at And if you liked our 100th episode, be sure to like and share for more great insights!

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