Hall Martin started out as an Angel Investor. He’s a host of an amazing Podcast called Investor Connect. He is the founder of the Ten Capital Network and he has helped over 12,000 investors and startups raised over $740 million. He focuses on venture funding, angel networks, crowdfunding, pitching, fundraising strategies, growth strategies, go to market strategies, and business model development

 

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Helping Startups & Investors Connect for Funding with Hall Martin

 

Brett:

I’m excited about our next guest. He is the founder of Investor Connect. And in fact, he started out as an Angel Investor, and he found it difficult to learn by doing his lessons, work can be hard and expensive. So he really wanted to help people figure out a way to do it in a better way. He’s a host of an amazing Podcast called Investor Connect, as well. He is the founder of the Ten Capital Network, out of the great state of Texas. And he has helped over 12,000 investors in its network, and it’s helped startups raised over $740 million. Please welcome the show with me, Hall Martin. Hall, how you doing?

Hall:

Doing great, Brett. Thanks for having me.

Brett:

Absolutely. Excited to get to know you a little bit better and share some of your wisdom with the audience. So would you start with just that first question, tell us a little bit more about your story and your current focus?

Hall:

My background is I started three Angel Networks in Texas back in the 2000s. They were the dinner club model, one in Austin, one in Waco at a university, and then one in a local county, and had a lot of fun with it. After three or four years, I decided to retire from my day job and start my second career and I started the company called Texas Entrepreneurs Network. And we were helping Texas startups raise money from angel investors accredited investors because they needed help. I saw them coming into my room full of investors in the angel groups and pitching 9% would go away, we would never hear from them again. 10%, though, came back gave us updates, reminders and built a little bit of a relationship. And they’re the ones that raised most, if not all the money. So I started the company under the name Texas Entrepreneurs Network because we wanted to show entrepreneurs, how do you raise money from angel investors and help angel investors figure out which startups they should be supporting and funding. And then we kept growing the business. And eventually, I needed more than just angel investors in Texas. So I recruited venture capitalists from the West Coast, East Coast, had a whole bunch of family offices joined my network in about 2016 – 2017. And then in 2018, I started getting calls from outside of Texas saying, “I want access to your investors, how do I do it?” I’m in Seattle, Chicago, or somewhere else. And so we changed the name to Ten Capital. That’s what 10 stands for, and started running our program around the US instead of just around Texas.

Brett:

Excellent, well, neat part of the story. We’re gonna dive into some of those particulars here in a minute because it’s inspirational to be able to help connect startups and people who want to grow as investors as well. But before we go there, Hall, I want to take a step back. And, you know, I believe we’ve all been given certain gifts in this life. Some people call them superpowers, some people call them, you know, strengths, I believe their God-given gifts and believe these gifts have been given to us so we can be a blessing and of help to others. So I’m curious, what’s that one or two gifts that you believe maybe you were given? And how does that help how you help people today?

Hall:

I think my two main gifts are one is empathy, I want to help and support others, I don’t necessarily want to lead it, I want to support them and what they’re doing. And the other is networking, I felt like I’m a good connector, a good networker. And in many of the jobs, I did in my day job for 24 years where I worked before I did angel investing. That’s what I did, I would go catalyze different groups to solve communication problems, get different groups together in order to achieve the strategic objectives of the company. And realize one day I’m just a networker, what can I do that will leverage more of my networking skill. And that’s how I came to the 10 Capital Model, which is we’re helping connect or network investors and startups together.

Brett:

Excellent. What’s the most rewarding part of what you do?

Hall:

Seeing a successful connection made where something happens from it, a startup gets advice and an investor gets an investment, both get a return on their investment. those are the things that are fun to make the project all worthwhile.

Brett:

Give us an example of a recent successful venture for the investor, the angel investor, and the startup.

Hall:

Great. So we have many companies coming in to raise funding. I have a company called Kiwi Tech that came in and they are actually raising money from investors. And we went to one of our investor networks, and they were able to raise a substantial amount of funding for their company. And that company, MIT’s going to allow them to grow and go better. And the investor group was new to the story. And so they were very excited to get a good startup to invest in so it was a win-win on both sides.

Brett:

Excellent. And for the scaling secret of the mid-level company who’s had some success, but hasn’t broken through until maybe that next level, maybe they’re doing a million in revenue, and they should be at 10 or 15, potentially, with what they have, give us kind of that type of story, right, which is they’ve had success, but they haven’t broken through. And then let’s talk about what, how networking and the power of collaboration with what you provide is helping to do that.

Hall:

Sure, you know, just to show the story, their seed funding their series. A funding the million-dollar company you talked about, and then Series B. And what you’ll find is that what you must do at each level is different for your business at the seed level, that the author is trying to convince the investor that you know, he can sell the product. And that’s what it’s all about is can you sell it, when you get to the series A level, it’s no longer about selling it, we know you can sell it, it’s about growing the business, can you grow it from one to $10 million. And what you have to focus on there are repeatable predictable systems, you have to take everything and turn it into a business model that you can turn the crank and it rolls forward in a repeatable predictable way. So when I was at my day job, we had this model we built up where it was a three-step process, we go to a trade show, get a lead, or a series of leads, come back mail to them, invite them to a seminar, some portion came out to the seminar, learn how a product work. And then at the end was we actually ran a closing process where an internal salesperson called up and closed them. And we had that thing modeled out, we knew how many leads we needed at the top, how many seminars we had to run, how many calls we had to make, and then how much revenue we would generate. So you need to identify a business model that you know how it works is predetermined in time and dollars, what it takes to run that business. And so that’s what we find a lot of when companies hit the million-dollar mark, what they’ve been doing is a lot of ad hoc selling, and working and so forth. But it’s now time to sit down and map out exactly what is the repeatable process, we’re going to put into place for each step, qualifying, closing the lead, and maturing the lead. And that’s what you have to do.

Brett:

What’s the biggest false belief for that entrepreneur who’s listening right now, who has that $1 million or so has been stuck there for a while, in order to move from the seed portion to the growth from one to 10 million.

Hall:

The biggest mistake people make is they think they can just keep doing what they’re doing. And what got you there is not going to take you to the next level. When you get to the million dollars, you have to change what you’re doing, you now have to do something different. Instead of just working on adding another salesperson, you really need to think more holistically about the company and how did you generate that lead? How did that lead flow to the salesperson? How did it get closed? How did the customer get service? And then you have to actually work on the systems, not just the ad hoc principles you may have done before.

Brett:

What’s the one hire that could help them to start that process today? What would that ideal team player look like? Is that an operations manager? Is that an HR professional who’s finding the right people? Is that someone who’s in Accounting? Who is it that they need to hire to move them away from seed to grow?

Hall:

It’s typically a COO, most startups start off with a Lean Startup model, skeletal group, and everybody’s wearing multiple hats, and they typically have a CEO, they have a CTO, maybe they have one other but they almost never have a COO, when you get to the million dollars, now’s the time you’ve hired the COO with a strong emphasis on the sales process. That’s what you have to really automate is that sales process and, and then build everything else in the company around to support that model.

Brett:

To find a COO. So it doesn’t get confused with the CFO or a founder, or, you know, what is the proper definition of a COO.

Hall:

So as the Chief Operations Officer and they’re looking at the actual day-to-day operations of the business, setting up processes, procedures, and actually seeing how well those processes are running your metric in those processes, you’re defining those processes. One thing you do with a million-dollar mark is you actually write out every job every step, every process, every procedure is all written out. It’s all defined. So when you hire somebody, they come in, you know, these, these pages are yours, these steps are yours. And then you can go put metrics on those as well, typically has been done, you know, kind of by the CEO and maybe by a CFO in some ways, but it’s really never been a focus of anybody. But now the process really comes to the fore, you have to really drive that process in a big way and optimize it as well.

Brett:

How do your services or your network help train COOs to do just that?

Hall:

So what we do is help startups and investors connect for funding. And one of the things we look for is what we call a growth story. When a company is raising funding, what the investor wants to see is that the growth story is happening, sells, team product, fundraise things are clicking up into the right. If you have that you’re going to raise funding, if you don’t have that what most entrepreneurs do is fall back onto the forecast. And they’re basically saying, “Well, I don’t have it today. But one day, I will.” And so what we have to do is go out and help them tell their growth story. And in fact, it’s more than just tell it as demonstrated, we put out updates every week to our network saying these guys have increased sales here. They’ve hired a new team member, they’ve added more funding to their process because they’ve closed more investors. And when they don’t have that, well, then we have to sit down and talk to them about their process. In most cases, it’s an operations thing that they’re missing.

Brett:

Amazing. By the way, you can learn more about Hall Martin at investorconnect.org. And he also has a podcast called Investor Connect. So much wisdom there, Hall. Have you written any books on this topic right here at all?

Hall:

I’ve not written books, but we do have a series of E-guides on the 10 Capital site under Education. We went to another podcast under Investor Connect called the Startup Funding Espresso, the time it takes to have an espresso, you can learn a topic around startup funding, or investing one to two-minute podcasts is what they are. Sign-up for the email to get that. And then we take those espressos on different topics such as how to do due diligence on a startup, how to pitch an investor. There are many topics there. And we created a series of E guides out of them. So it’s not a book. But I would say a series of V guides that is the equivalent of a book is available on our site that goes back to this process of raising funding and investing in startups.

Brett:

Startup Funding Espresso Podcast. I want to start listening. 

Hall:

I think that sounds fantastic. 

Brett:

Let’s talk about the person who’s listening right now and says “Yes, I need to be connected with Hall. I want to get in with like-minded entrepreneurs, startups, investors.” What do you offer besides the podcast as far as the next steps if they want to really dive in?

Hall:

Sure. So on the Ten Capital site, that’s tencapital.group. On that, we have two pages, one for Investors and one for Startups. The one for the Investor shows, here’s how you connect with us, you know, for many of the deals that we’re showcasing, there’s no fee to it. But we do have some deals with early exits on it, we came out with a new model called three x and three, which basically says, if you sign up, but this term sheet, you’ll get the option to have three extra investment at your three, or you forego that, and you just take an equity position on the company. So we have people sign up for that to find those kinds of deals that we are sourcing for them. If you’re a startup and you’re looking for funding, you go to the Startup page on Ten Capital. And there’s a couple of options for how we can help you raise funding. Fundamentally, we’re going out and making Investor Relations and Introductions processes for you with our 12,000 investors. So we’re going through that process that most people have to do by themselves. When I ran the angel networks I saw the most difficult part was you had to get the introduction. And then you have to keep the investor up to date. And so that’s what we’re helping them do.

Brett:

Excellent. Now we’re doing a focus on capital gains tax as pertains to selling out of a highly appreciated business such as a startup company, right. So curious, what’s the biggest frustration, Hall when it comes to capital gains tax deferral options as it pertains to a business owner selling his business?

Hall:

Well, that’s always a challenge. Typically, investors have asked the startup to move from an LLC to a C corporation, because the Delaware C is the most favorable for the investor. And there are other advantages with the board and so forth. But when it comes time to sell well, what most people will tell you to need to do is get back to the LLC. And so because of the taxation issues are quite challenging in that matter. Along the way, there are tax advantages for the investor that they should know about, such as Section 1244, and that gives the investor the ability to take ordinary income deduction of losses rather than capital gains deductions and what you’ll find Is that there’s several of these tax advantages for startup investing that you should be aware of. The other one is Section 1202. It reduces or eliminates taxes on gains from an exit. And so you might want to look at that there are requirements around it, you have to be in the deal 5 years, it has to be an equity structure. But you’ll find that there are many tax-reducing elements because they’re trying to encourage more investments into startups.

Brett:

Excellent. So Section 1244, Section 1202. Take a peek at those, especially if you’ve been in five-plus years, and you’re selling equity. Is that a fair summary?

Hall:

That’s right. Those are the two big ones. Yes.

Brett:

Excellent. Excellent. Moving to the lightning round, if you’re ready.

Hall:

Sure, we can go. 

Brett:

Great. So knowing what you know, now, if you go back to your 25-year-old self, Hall, what’s the one Golden Nugget, you would make sure that you would do?

Hall:

Invest early, invest often, don’t wait for a better time in the market. Invest now just get in there and start making things happen.

Brett:

Excellent, favorite book, or most recommended book that you’ve given away in the past year?

Hall:

Mr. Monkey and Me, it’s a book by Mike Smerklo, about the mental side of starting a business and just did a podcast on Mike and thought, there’s a really real value in that because running a startup is hard. It’s lonely, and there’s a mental toughness you have to bring to it. And I don’t think most engineers are aware of that. So Mr. Monkey and Me is a good one.

 

 

Brett:

Excellent. Favorite leadership quote, or theme that you strive to live by?

Hall:

No battle plan survives first contact with the enemy. So no business plan survives first contact with the customer.

Brett:

I love that. That really says it well. Best angel investment you’ve ever made?

Hall:

I invested in a company that was a snack bar that was two hippies that really just, you know, loved making all-natural foods and so forth. And I looked at that and said, this is going to be a great donation turned out to be my best investment ever.

Brett:

Worst angel investment you ever made?

Hall:

Oh, yeah, my first one, I invested in a company that did surgical packs for LASIK eye doctors back in the late 90s. And they had a great exit, and they had a great plan, and they were selling and so forth, put money in and long story short, they bled the company dry and left the investors without anything.

Brett:

If you could partner with the shark on Shark Tank, who would it be and why?

Hall:

And Mark Cuban, I think he has a certain view of the world that I think is very successful. You know, some people do it by financial engineering. And some people do it by, you know, deal structuring. But I think he goes right at the heart of the who is the entrepreneur? And I think that in the end is the answer. You have to believe in the people and invest in the people.

Brett:

What are you curious about right now?

Hall:

I’m curious about post-COVID life, I’m curious as to what is going to go back to the old ways and what is not going to go back to the old ways. I think we’ve got a new reality. And the new reality is going to be the permanent reality here pretty soon and wondering what is going on? Are we going to be back to restaurants or not? Are we going to go back to business meetings or not? I’m sitting here doing these zoom calls all day, having tremendous efficiency not having to get in the car plane or go anywhere? And I really wonder, am I really gonna go back get on a plane for a business meeting, because I’m just not seeing the benefit of all that. I think we were overpaying for that for a long time.

Brett:

I couldn’t agree more. In fact, I just joined a company called EXP commercial for that exact reason. They’re taking the real estate model and they’re flipping it on its head and doing everything virtual. Right, and they’re taking and saving a lot of savings and giving it back to the agent. So that’s really cool. most exciting new market given COVID-19 what do you think the most promising that’s opened up given the circumstances that just happened?

Hall:

Online direct to consumer, I’m seeing a lot of movement into creating fulfillment centers. Instacart just decided we’re not going to ship anymore. We’re just going to become the technology platform for everyone else that wants to do it directly to consumers. So I’m seeing a lot of things shift into that model. And thinking that’s going to be probably a permanent change direct to consumer marketing, where they just delivered to your door who needs to go to the grocery store anymore. Just send it to my door and that will save me time.

Brett:

Yeah, exactly. Right. My wife, with five kids, it’s like a godsend that we don’t have to go to the grocery store anymore, right? And we can just literally have everything, even Costco and all the other places we shop at just come straight to the door. It’s amazing. I’m curious what you think about drones? It’s kind of a semi? That’s a curveball here. But you know, they keep talking about drones changing the world as computers did, you know, 20 years ago in the next 20 years, it’ll change as much or more than what they did. So any thoughts on just drones? And even just delivery? Different things like that? Is that I feel like it’s getting attraction? Is that gonna get more here? Or what do you think?

Hall:

I think for certain things in for hard-to-reach areas, I think drones will have a good application. In general, though, I think there’s a lot of advantages to having that truck pull up because it’s just more efficient to take it to an area or neighborhood, I do think shipping is going to have to come to be more local, not, you know, not shipping it from across the country, but shipping it from a fulfillment center across the city. So I’m seeing fulfillment come local. And in most cases, the roads are good, good enough. And if we’re not all driving somewhere, you know, there’s no traffic jam anymore. So I wonder if drones are really going to be effective with a lot of things like that.

Brett:

Excellent. And this last question, Hall, I appreciate you do some little extra lightning round. But your answers were so good. I had to ask a few more. But this is the last one. So after all your success, Hall, and after all the people you’ve helped out and the Podcast and Texas entrepreneurs network? How do you stay centered in your values? And how do you stay encouraged to charge for Ford and reach for new goals.

Hall:

It’s just my life’s passion to help people. And so I want to see entrepreneurs grow and succeed and want to see them start businesses generate wealth and create jobs. And so, you know, my father, you know, he was a part of the SBA Small Business Association and he was always helping companies or, you know, get up and running with loans. And ever whenever we drove around town, he points to a restaurant or a bar or a shop and says I helped fund that. And I always thought that was neat, you know, to help us startup, get up and running was what was all about. And so that’s what we that’s what keeps us focused.

Brett:

Beautiful. I encourage you to keep using the gifts and talents you’ve been given. To help and support others who are networking and who are looking for debt work with entrepreneurs to grow in their investments and to fund their deals again, you can find more about Hall Martin at investorconnect.org, you can also go tencapital.group and then Startup Funding Espresso Podcast and the Investor Connect Podcast. Hall, thank you so much for being on the show. Appreciate your time and again, sharing so much wisdom with us and it’s such a short period of time. And that wraps up another show the Capital Gains Tax Solutions Podcast. Also want to thank all of our listeners for listening. We couldn’t keep going without your support. And remember, if you’re struggling with capital gains tax on the sale of a business or real estate and go to capitalgainstaxsolutions.com learn more about the deferred sales trust, and please Rate, Review, and Subscribe. We so appreciate everyone who’s listening. Goodbye, everybody.

 

Important Links:

• Hall Martin
• Investor Connect
• Ten Capital Network
• Startup Funding Espresso Podcast

 

About Hall Martin

Hall T. Martin is the Host of Investor Connect and Founder and CEO of the TEN Capital Network. Hall launched TEN as the Texas Entrepreneur Networks in 2009. Today, the TEN Capital Network has over 12,000 investors in its network, and has helped startups raise over $740M.

 

 

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