Building at PearX with Gautam Ajjarapu
Background
Gautam Ajjarapu is the Founder & CEO of Glide, which aims to help modernize legacy financial institutions by providing seamless onboarding and running modern marketing campaigns. Gautam participated in the Summer 2021 PearX cohort. I talked with Gautam about what attracted him to apply to PearX, how they help startups during and after the program, what advice he would give to someone applying, and more.
Highlights
- Around 85% of PearX startups raise a successful seed round from institutional investors. Gautam shared that Pear connected them with every investor in their seed round, which ended up being 3x oversubscribed.
- Pear’s in-house talent services, led by Matt Birnbaum, former Head of Talent Acquisition at Instacart, is a compelling part of the accelerator offering. Matt and his team source candidates for the startups in PearX, and Gautam noted that 20 offers were sent on behalf of the startups in the most recent batch during the 14-week program. So, PearX helped every startup, on average, place at least one role.
- Pear built several internal tools to streamline fundraising interest, including a Demo Day app and investor relations dashboard. Additional resources include idea banks to help startups pivot and support with customer discovery.
- The PearX deal is structured as a base amount to secure a standard ownership size in each startup and an optional additional check for startups.
Interview Transcription
Kieran: Thanks, Gautam, for joining me today. To kick us off, do you want to introduce yourself?
Gautam: Thanks so much for having me. My name is Gautam. I’m one of the Co-Founders and CEO of a fintech startup called Glide. Glide’s mission is to help modernize legacy financial institutions. So, we’ve seen over the past decade the rise of these neobanks who have been able to provide exceptional technology and some incredible marketing and growth strategies to specifically the younger audience. While it’s been great for consumers, legacy financial institutions, namely community banks and credit unions, have been left in the dust. So, Glide is helping empower these financial institutions with better onboarding software, loan origination software, and mobile banking tools so they can be competitive with the rise in neobanks we’re seeing.
Kieran: You participated in PearX in 2021. Is that correct?
Gautam: That’s correct. I met my founding team – one in middle school and the second one in college at the University of Illinois. All three of us come from a pretty technical engineering background, and we were actually working on a different idea at the time. We used a lot of our learnings from some of the internships and co-ops at companies like Google and Stripe. We were working on a consumer idea. We wanted to build a better way for Gen Z and millennials to get access to banking technologies in a fun, gamified, and social way, which is what we’re seeing these generations looking for. We realized we needed an accelerator program or some investor partner who knew this journey well to help us expedite a lot of the learnings. And as a result, we came across PearX and applied to the accelerator.
Kieran: Were you considering other accelerators at the time? Can you talk more about what stood out about the PearX program?
Gautam: We’re all first-time founders, so I think we were all very aware of what stage of founders we are. We didn’t know much about the startup ecosystem. We’re builders and scrappy. My co-founder and I have been doing this together for a decade now. We had some big company experience, but I think we knew we needed something that was really hands-on. We went through the process of some of the bigger accelerator programs, but what stood out about Pear was the cohort size. For us, either 15 or 16 startups made up the entire cohort. Each of us got a partner who worked directly with us on everything from the ideation phase to getting an MVP up and off the ground. So, you know, I think it depends on what kind of stage you are as a company, but for someone like us, who needed a lot of hands-on support, wanted those lessons, wanted to hear from really experienced partners and founders, I think Pear made the most sense. We ended up doing that accelerator program in the Summer of 2021.
Kieran: Can you give an overview of PearX’s admission process?
Gautam: The process starts with the application. Currently, applications are live. They are filling up the final few spots of the PearX winter cohort, which begins in (January). So, if you’re a startup founder or looking to become a startup founder, check that out. Afterward, you’ll have a couple of interviews. So, one will usually be a 15-30 minute intro call, just so one of the partners on the team can get a good idea of who you are as a company and team. Then, you’ll move to a much deeper round where you’ll sit with a couple of partners on the call, and they’ll go through your business model. The format is pretty standard. You’ll be asked to pitch your product, answer questions from the partners, bring some questions about Pear, and have a great discussion with the team.
Kieran: What were some questions they asked you during the interview process?
Gautam: What’s important to know, and my advice for founders at this stage is the team is the most important thing, right? You might be coming in as a pre-seed company, maybe between a pre-seed and a seed-stage company. You might have a little bit of traction or a lot of traction. At the end of the day, you’re in the earliest innings, and what’s going to make your company successful is your team. So, several of the questions we were getting were around why you think you’re the best team to build this product? I think it’s a really important question to ask because that is your only moat today, right? It’s you as a team. So, think deeply about where that founder-market fit story is and how you think your team is going to separate itself from the inevitable slew of competitors that are going to be coming after the same space as you guys. So, that’s one category of questions. Then, the other one is just thinking about where is the big vision. Often, companies will have a compelling wedge or hook and start to see some early traction or customer success stories. Still, they won’t necessarily have a great idea of how this can translate into something venture-scalable and a big company. So, of course, it’s unnecessary to have a multi-year roadmap filled out at this moment, but at least having an idea of how you think your initial wedge can translate into something much bigger makes for an exciting narrative.
Kieran: I was talking with a founder who went through Sequoia Arc last week, and he was telling me there were two ways to apply to the program. You could apply directly or raise a pre-seed or seed round from Sequoia Capital, and they would also extend an invitation to the program. Is that the same case with Pear?
Gautam: Usually, the Pear Partners, if they are doing a pre-seed deal, will expedite you through the process for the accelerator as well. If you’re choosing between just trying to raise a round versus doing the accelerator program, I would say put your attention towards applying to the accelerator program. That will show the Pear team that you are looking for more than just a check, right? You’re looking for a Partner to build this with from the beginning stages.
Kieran: PearX’s program is structured in four phases: idea development, execution, Demo Day prep, and Demo Day. Can you describe what happens during the 14-week program and how they structure the curriculum?
Gautam: Yeah good question. I can loop in some of our own experiences here at Glide. You might’ve noticed that I said we got in with a consumer idea that we had. When I gave my pitch initially, we discussed a B2B fintech idea, right? So, you may be wondering what happened along the way. So, those four steps are accurate. The structure is a 14-week-long program. You’ll meet with a dedicated partner weekly. Often, there will be multiple partners in that weekly meeting as well. Everyone is super accessible on the team. In the beginning, they’ll figure out what kind of industry you’re in and your strengths and weaknesses as a founding team. And because they’re only 15 or 16 teams in our cohort, they can do these in-depth (reviews) with every company. So, we got the partners assigned to us who could help us with fintech and consumer growth and fill in the weak holes in our team that we needed experts for. In addition to that, you also get access to a mentor. This mentor is not directly employed or affiliated with the firm but is an industry expert with whom the Pair team has connections. So, our mentor ended up being one of the vice presidents of product at Square. So, it was significant for us because we were leveraging a lot of Square-like infrastructure on the backend. So, it helped make that connection. In addition to that, you’ll also have group meetings with other founders. So, one of our favorite parts of the accelerators was you’ll have that once-a-week meeting with the partners, which is just you and the partners. You’ll also have a meeting with a cohort of other founders – so they’ll split the group of 15 into smaller subgroups. We had a group of 3-4 people working in the consumer or fintech spaces. We would sit down with them, and we’d share all of our learnings for the past week. We’d measure our progress against each other, and it’s an excellent way to see if you’re on track to hitting these Demo Day goals. One thing that I want to talk about in particular is what that idea generation process looks like. So, we entered in with this consumer idea. Throughout the program, we leveraged the Pear insights to refine that idea and get it to a point where we thought it was Demo Day presentable. Throughout that process, we had access to Pear’s resources to ideate and generate concepts. So, Pear has things like idea banks and idea generation boot camps, and they put you in front of customers. They give you these different thesis testing frameworks. It’s really built for pivoting. I think that happens to many startups where they’ll come into an accelerator program and have an idea, but pretty soon, they realize they have to refine or pivot it. Often, investors might not give them the support that they need. They may shift their attention to the winners of the accelerator program or those who don’t need as much support because they think they have a greater chance of succeeding. Pear does the opposite. They recognize the companies that need some help and refine these ideas, and they help you set up those thesis testing frameworks and talk to all the necessary customers. It makes it a seamless and often enjoyable process to pivot.
Kieran: Can you talk more about the idea banks and idea bootcamps? What is that? Is that the partners adding ideas to a spreadsheet, or how is that structured?
Gautam: One of the benefits of being a company like Pear is you get to see a lot of startups through the pipeline just as their general deal flow for investing. So, they have now been able to collate a wishlist of ideas that are customized per vertical. So, if a fintech founder comes in with a fantastic fintech background but finds out the idea doesn’t have as many legs as they thought it would during the initial pitch -- they can actually reference the customized lists of ideas that the partners wish they saw in startups that were pitching to them. It’s almost like a request for a product, but specifically for PearX companies. I think the other very important thing is these Pair Partners are very direct with you when they feel like it’s time to switch ideas and/or refine the idea. In the first two weeks, we had conversations with partners who were asking us questions about the longevity of this idea and we as founders went back to the drawing board, figured out answers to those questions, and on our own realized very early on that this was not an attenable idea. So, we were able to start that ideation boot camp right from the beginning. That’s usually a couple-week process where you’re testing a bunch of different ideas, sharing those learnings with the partners, and trying to get to a point where you can start refining and getting to Demo Day.
Kieran: Were you the rare case or were many other teams also participating in that boot camp and potentially switching ideas?
Gautam: So, we were one of the few that went all the way back to the beginning and started from square one. We were throwing all things at the wall: lending APIs, payment APIs, disputes, chargebacks, and this consumer idea we ended up leaning into. Almost every company has some amount of pivoting to do. It’s a spectrum. So, most companies, I will say, end up in the same industry and along the same kind of product vision, but the actual framing of the product, narrative, the roadmap, all that stuff will change.
Kieran: What was the most valuable aspect of the program for you?
Gautam: Yeah, one is everything that I said. First-time founders coming in, we didn’t have much industry experience. So, understanding what makes an idea stick was a huge lesson we learned. I think all these resources helped with that. The other one is post-Demo Day. So, I single-handedly owe all of our Seed round success to Pear. I didn’t send an investor a single outbound email, cold call, or Twitter DM. Every single investor connected was directly through Pair Partners – going out, figuring out which funds would be the best fit for our seed round, and making intros directly to my email. When I tell founders that, that blows them away. In every fundraise, there’s always a component of I want a cold email to access these top-tier VC funds, right? There was none of that. Every single fund you could think of Pear had multiple connections to. They first made all those connections with me directly – the request was pretty far-fetched, right – we were a consumer app, and so we wanted to talk to celebrities. Pear connected us with Odell Beckham Jr., Steph Curry’s VC fund, and Jason Derulo’s VC fund. Whatever you kind of need in the venture world, they were able to help with. And then, after that, they are on regular calls with you. The support doesn’t stop after Demo Day. I had a call almost every day with our partner, who we were assigned with at the time, where we just went through all the calls per day that I was doing while I was raising the seed round. I went through the notes of each one. I figured out where people were leaning to, where people were leaning out. I got his feedback; part of that was he went to back channel with all those people he introduced us to. So, Pear bends over backwards and fights tooth and nail to ensure you get your seed round done. As a result, 85% of companies leaving Pear raise a successful seed round.
Kieran: That seed round happened after you pitched at Demo Day?
Gautam: Yeah, after we pitched at Demo Day, which around 2,000 investors attend yearly. We ended up doing about 250 pitches that were all introduced to us. We ended up raising with offers for approximately three times the amount we were willing to take. So, we bumped up the amount that we were ready to take by a little bit and the valuation a little, but at the end of the day, we just had this huge surplus of investors that we had to say no to. It’s a great feeling. We came into the accelerator without even an idea, and leaving it with 3x offers compared to the amount we needed was incredible because of Pear.
Kieran: Can you talk more about what happens on Demo Day? How do they structure that event?
Gautam: So, Pear has built some important internal tools to improve that process. Pear has built a Demo Day app and an internal investor relations dashboard. During Demo Day, investors can go on the Demo Day app, see the list of 15 companies, and request to be connected to them. So, they’ll have that pulled up on their phone while the presenter is presenting, and the pitch itself is pretty standard, a 5-10 minute about the company. When they request a connection, it’ll auto-generate an email connecting those two. It’ll even pull in some information about them that you use when signing up for the app. So, it’s a super seamless way to do it. After, there’s an internal investor tracker. So you and Pear have complete visibility into everyone you’re talking to, everyone you’re waiting on Pear for an introduction to, and every action item that you need to complete. It’s built to get those, maybe not as much anymore, 2-3 week seed rounds that we used to see and hopefully continue to see from Pear companies.
Kieran: PearX invests between $250,000 and $2 million into companies accepted into the program. Do they have standard terms?
Gautam: They are standardized terms. The way it worked for us was we had a base amount that was part of the program, and then there was an additional check that we could take in case we needed more capital. (The additional check) was at a more favorable valuation, so the dilution was very little. So, most companies end up taking the base check and the add-on. Don’t quote me on the numbers now because things have been rising quite a bit. But generally, there is a pretty standardized package in ways that you can get more capital from them.
Kieran: Can you share the actual numbers?
Gautam: I don’t know the most up-to-date numbers. They’ve changed since I went through the program. I think it’s probably at least doubled since we went through the program.
Kieran: What advice would you give to someone applying to PearX?
Gautam: For any accelerator program, it’s always great to get referrals. Getting more people to buy into your idea is great. So, search your networks, even reach out to people in the program like myself, and say, “Hey, I’m working on this idea. Do you mind putting in a referral?” That’s always a great way to get your foot in the door. The second one is to really understand the importance of the team. At this stage, they are looking for great founders. I think Pear knew coming in that our idea had a lot of holes. But, they didn’t necessarily let that stop them from making a bet on who they thought were great founders.
Kieran: Did you apply through referral? Who was that referral from?
Gautam: We ended up just applying cold. We ended up knowing a founder who was a couple of connections away—we ended up talking to a Partner at Pair who was connected to us through a couple of people. But we sat down and scoured our networks to find those connections. From Pear’s perspective, you have to understand that this program’s acceptance rate is really small. They get a thousand-plus applications and can only take 15 by design. So, anything you can do to stand out by talking to others already within the Pair network is a great way to set yourself up.
Kieran: What advice would you give to a founder accepted into PearX to make the most out of the program?
Gautam: Taking advantage of the small size of the cohort is the biggest thing. This is unique to Pear. Every single partner is available to you. While you will be paired up with partners most relevant to your direct needs, talking to everyone on the team has tons of value. So, it is important to reach out, understand all the other partner’s backgrounds, and come to them with specific questions. Part two is taking advantage of all the resources within the program. Many times I think I hear accelerator programs say something along the lines that this partner is available to you, but there aren’t set processes or products that allow you to get help in certain areas. Pear has built a lot of those things out themselves. So, I mentioned the Demo Day app, the investor relation tool, and recently, they brought in a recruiter for PearX companies. His name is Nate. Nate’s job is to help source candidates for PearX companies within the accelerator. Last batch, they placed 20 offers during the 14-week program. 15-16 companies, 20 offers, that’s almost every single company on average placed a role within the company. These are specific pre-seed roles – first engineer, first designer, CTO, technical co-founder. And so to have those resources – and the list keeps growing. So, the advice here is to figure out what’s available today and what’s coming to you in the future. Be kind of an early beta tester for all of those, and you’ll have plenty of resources available to you.
