A Founder’s Roadmap For Building Angel And Venture Capital Connections

Of the 80% of the global workforce who do not sit at a desk—cooks, factory and warehouse workers, carwashers, and more—70% of them report that more technology would help them do their jobs better, according to Emergence. “Yet only 1% of software venture funding targets their needs for job training,” said Rachael Nemeth, CEO and cofounder at Opus, a learning platform that helps businesses engage and train their deskless, frontline workforce. “Ninety-nine percent of venture capital dollars went to the 20% of those sitting at a desk.”

Training is critically important to attracting and retaining deskless frontline workers.

Having worked with Danny Meyer, one of the most respected restauranteurs in the world, Nemeth had street creds in restaurant training but no connections or reputation in the world of technology and venture capital. She developed a roadmap for raising angel and venture capital when you don’t have connections to the venture community.

A Text-Based Training Platform Morphs Into a Mobile App

Before the pandemic, most restaurants relied on in-person training delivered by managers or trainers who were not experts in the specific topics being taught. The pandemic accelerated the adoption of technology for frontline worker training.

Nemeth’s roots are in the restaurant and hospitality industries doing instructional design, including for Danny Meyer’s Union Square Hospitality Group. She is certified as an English as a Second Language instructor. “We were hiring 300 cooks in 30 days for new restaurants, and 30% of them didn’t speak English,” said Nemeth.

Her first company, ESL Works, was an education-technology startup that provided text-message-based training to restaurant workers. When Covid-19 hit, workers at restaurants and other open frontline businesses were getting sick.

ESL Works leveraged its tech to create a public initiative called Stop Covid, which delivered free text messages providing Covid safety training. “We grew that initiative from zero to 20,000 users in two weeks,” exclaimed Nemeth.

The initiative’s success validated the need for a training tool for frontline workers. “There are thousands of training platforms or learning management systems [for the 20% who sit at a desk], but none built for [deskless] frontline employees,” said Nemeth. These systems couldn’t-rapidly pivot during Covid to meet the needs of the deskless workforce. Texting was a quick fix, but a more robust solution was needed.

Opus was born as a mobile-first learning platform that helps restaurants and other businesses with frontline workers provide customizable, on-demand training on customer service, food safety, operational procedures, and more. The platform is designed to be easy to use and accessible from anywhere at any time. Critically, the training can be translated into 100 global languages instantly.

Six Tips For Raising Raising VC When You Don’t Have Venture Connections

Nemeth’s career wasn’t spent in tech, and she didn’t come from wealth. She went to a public university, not an Ivy League school. The perception among funders was that women ran mission-based businesses, which were nonprofits, not businesses that gave shareholders a significant return on their investment.

“The odds were stacked against me [raising venture capital],” said Nemeth. “I always felt like men were getting praised for running VC-backed, mission-based businesses, and I was getting punished.”

It took a while to learn the ropes. Nemeth’s journey provides other founders with a roadmap for building venture capital connections.

1. Join accelerators: Nemeth joined a couple of accelerator programs providing capital access. Blue Ridge Labs, run by the Robin Hood Foundation, provided a grant, training, and an opportunity to meet other founders. The New School, where Nemeth was getting her Master’s, had an accelerator. She won the pitch competition at the end of the program, which awarded her money.
2. Enter pitch competitions: Participating in competitions was about more than just the money. Nemeth received feedback from VC judges on her pitch. It was also an opportunity to meet other founders who were raising capital. This opportunity enabled her to build a network of peers. They gave her the inside scoop on VCs who weren’t worth approaching.
3. Target late-stage founders who are angel investors: When a VC with whom Nemeth was having what she thought was a good conversation unexpectedly said “no” to providing capital, she asked for feedback. During the discussion, he told her that she had broken out in hives, which was a deal breaker. “This was because I was a woman, and he was paying attention to my body, not my words,” she said.Nemeth changed her capital outreach strategy to research late-stage founders with industry or adjacent industry knowledge. The list was highly curated and required a lot of research. She sourced people with referrals from lawyers and searched AngelList. Her calculus was that 50% of the 100 people on the list would respond, and 10% of them would take her call. Her calculations proved correct.
4. Ask for advice, not money: “I just needed four other founders to help me figure out how to raise capital,” said Nemeth. Dan Teran had sold his company, Managed by Q—a marketplace platform for office cleaning and maintenance services—for over $200 million. He responded. “Little did I know he was also an angel investor.” His was one of the first checks in the preseed round.
5. Ask for introductions: Teran knew what raising money in the sector was like. He not only made introductions but also coached Nemeth. After that, she closed her preseed round pretty quickly.
6. Be adaptable and resilient: “I signed a term sheet with NextView Ventures on March 12, 2020 [for a seed round],” said Nemeth. On March 13, the world shut down. Horror stories abounded about VCs pulling out of deals or lowering startup valuations. NextView did none of that. But the founder angel investors who had committed to her did pull out. They needed liquidity.

NextView and existing angels helped me make another 50 introductions to VCs to close out the rest of the round without ever having a conversation with me about an expired term sheet, a changed valuation, or any threat at all that they didn’t still believe in the world that we were trying to create with Opus.

In May 2023, Nemeth raised $6.8 million in a Series A funding round led by Stage 2 Capital. Existing investors—including Gutter Capital, NextView Ventures, and Bling Capital—also participated.

How have you found angel and VC investors for your startup?