Neil Patel

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Don Muir made the leap from traditional investment banking and private equity, to disrupting the traditional financial services space for the tech ecosystem. His startup, Arc Technologies, has attracted funding from top-tier investors like Bain Capital Ventures, Torch Capital, Y Combinator, and Clocktower Technology Ventures.

In this episode, you will learn:

  • How Arc is different from traditional banks
  • Don Muir’s top advice when starting a business
  • Investor rejections


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.

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The Ultimate Guide To Pitch Decks

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Don Muir:

Don Muir is a fintech entrepreneur on a mission to make finance and banking faster, better, and more equitable.

Don covers the disruptions impacting traditional banking and finance, the innovations driving the fintech category, and the potential of technology to solve long-standing challenges like access to growth capital, founder-friendly banking services, and alternative financing models built to help tech companies scale responsibly and without unnecessary dilution.

In 2021, Don founded Arc Technologies while studying at The Stanford Graduate School of Business and has since raised ~$200 million of equity and debt capital.

Arc offers non-dilutive capital, digital banking, and analytics that enable startups to fund their early growth, avoid unnecessary dilution, and create a stronger startup ecosystem.

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Connect with Don Muir:

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty hello everyone and welcome to the dealmakerrs show. So today. We have a really exciting founder. You know we’re going to be talking about the good stuff. The stuff that we want to hear you know the building scaling financing. You know all all of that good stuff. We’re going to be talking about today equity equity versus debt. Um, you know also private equity private equity going into startups. So I find that you’re all going to find the episode today quite inspiring so without further ado. Let’s welcome our guest today Dawn Weir welcome to the show.

Don Muir: Pleasure to be here. Thanks for having me.

Alejandro Cremades: So originally born there you know and and you grew up there in the in the Massachusetts area not far away from Boston so how was life growing up, give us a walkthrough memory lane.

Don Muir: Yeah, definitely bounced around a little bit as ah as a kid grew up born in the Greater Boston area moved to Rhode Island for about a decade for my dad’s job and then moved back to Boston to go to the same public high school as. As my mom and my grandparents who who immigrated to the us in their teens.

Alejandro Cremades: So that has to be you know, quite inspiring for you to to to really learn. You know from your from your grandparents because you know the immigrant stories they’re like quite unique I mean I’m an immigrant myself so really understand you know what. What that looks like but I’m sure that for you you know being able to hear how they were able to to come here to really make it happen for themselves and for the family I’m sure that that has shaped who you are today.

Don Muir: I grew up very very close with my grandparents. They immigrated to the us in their teens didn’t speak any english faced anti-immigrant discrimination shared that story with me from ah from a very. Young age my grandfather in in particular he went to ah public high school in the hometown that the same town that I grew up in and went to the the same public went through the same public school system as him. Um, so I got ah I got to relive that firsthand and and he would share stories with me. Um, he went to this school. Ah, he didn’t speak any english he ended up enlisting in the army and and fighting in world war ii ah landing in in Dday and and and dredging through ah France during ah during world war two to earn his stripes to prove that he was american he came back penniless. No education and and started tailoring a tailoring business with the support of ah his his immigrant wife. They bootstrapped this business and had a fair degree of success and sharing that journey with me just really put things in perspective at a very young age and. Was part of the inspiration for starting ah my own entrepreneurial career.

Alejandro Cremades: I Mean you know obviously by learning from their own Story. You know that anything probably with hard work and dedication is is possible in this life. So Did you perhaps you know like after like listening to those stories did you were you like clear that. Eventually one day you would have something of your own.. Thanks.

Don Muir: I always have been passionate about entrepreneurship. My grandfather was definitely the source of that inspiration I had a competing interest in finance I started investing and day trading at a very young age in my teens I just really enjoyed. Understanding businesses and and pick you know trying to pick winners in in my teens I didn’t know what I was doing at the time but I had this competing passion for both finance and entrepreneurship starting in my early teens I’d say you know 1010 to 13 years old.

Alejandro Cremades: Yeah I mean you were you were day trading at about 15 years old so what what were you doing? How were how are you there like movie money buying and and selling.

Don Muir: Yeah I think it was Scott trade or or etrader one of the the early movers in in in the digital trading space I managed to convince my mom to open an account for me under her name and I took I took some of the cash I I made for my early. You know my earliest jobs and and it would invest it in the stock market through her account. Um I would research companies. It was brands. You know that I was familiar with at the time that I thought I had ah had a lot of momentum in the market. Some of them ended up doing okay but it inspired me to to pursue ah finance as an undergrad. And and later to work in in private equity in New York and you know eventually you know to this day working in ah at a fintech company.

Alejandro Cremades: So let’s talk about you know, let’s say let’s talk about then you know going into Cornell because in cornell there you did study finance and strategy and they also you know you got ah a taste of starting something. You know you you even got you know about put together. They are not-forprofi.

Don Muir: Yeah, even at at Cornell I had this competing interest in building something of my own and pursuing finance which was kind of the the cookie cutter path out of Cornell I think Cornell is one of the the top feeders into the the big bulge bracket investment banks and so I studied finance.

Alejandro Cremades: Is that right? yes.

Don Muir: But then outside of the classroom I did whatever I could to roll up my sleeves and actually you know build myself I started a a five one c three at Cornell that’s now one of the largest organizations on campus that was that was mission driven with the intent of of um. Giving back to the community and and now that’s a vibrant student organization at the same time in the classroom I was taking every finance class that I could I could I could get into and um at graduation I had ah ah a tough decision around whether I pursue my interest in in operations and building and entrepreneurship or or to work. Um. On wall street in investment banking.

Alejandro Cremades: Eventually you ended up joining the Boston Consulting group and 1 of the things saying about people that go into consulting you know I guess some of the best entrepreneur entrepreneurs. You know they’ve had some either experience at a previous startup either. They were in private equity or Vc or consulting. I find that those say different segments. They just they just prepare your mindset for dealing and tackling you know, whatever you have in front of you in this case consulting to certain degree. It helps you to grab big problems breaking. Break them down into smaller problems and then you know start tackling one after the other in this case for you. How do you think that the world of consulting you know, helped you to be a better entrepreneur. So.

Don Muir: You hit the nail in the head its strategy and problem solving I got my first taste of of operations and understanding how businesses tick that experience wasn’tvaluable when I ultimately you know later went on to to work in in private equity. Um. But the ability to take a large and nebulous problem to break it down into its constituent parts and then tackle those individual elements solve them and then put the puzzle back together to solve that overarching issue or that problem at hand that skill set. Has been invaluable in my entrepreneurial journey and um, it’s really paid dividends at at arc particularly and in recent months given how much dislocation we face in the in the startup banking ecosystem.

Alejandro Cremades: And we’ll we’ll talk about that. It just a little bit but you know while you were there at Bcd and definitely you got the glimpse of private equity and you decided to switch gears. So why.

Don Muir: Yeah, so ah I spent most of my time at Bcg working in operations working in strategy at you know, hundred plus Billion Dollar publicly traded companies. The residual I spent working on the private equity team doing commercial due diligence for the largest pe funds in the us. That’s where I really rekindled my interest in finance and investing and I I needed to I needed to take the next step. So I left Bcg to join one of the largest private equity funds in the world called Onix Partners it’s publicly traded on the toronto stock exchange I was in the New York office and. And I joined onx specifically because they are or they were ah value investors. They would find ah businesses that were generating a relatively high ah percentage of you know, levered free cash flow relative to to valuation and we would buy. Cash flow and we would analyze the the underlying fundamentals and growth of these companies and make our investment decisions not based on you know hype or or fomo or who’s on the cap table but based on ah business fundamentals and and and durability. And so I really got my finance toolkit I built that finance toolkit and that ownership mentality during those years working on the investment team at at Onix Partners in New York

Alejandro Cremades: So value investing I mean I guess for the people that are listening. You know I guess that’s the mentality of Benjamin Graham I believe you know who is the um, you know who who really came out of that was Warren Buffett following that type of um, ah. Thinking or thought process when making investments. But I guess in this in this situation. You know from a private equity perspective when you were looking at the value investing what kind of patterns. Did you see from companies that deserved an investment because of that long term potential versus those that didn’t.

Don Muir: Yeah, we we look for ah the ability to generate cash expand margins grow defensibility of of those businesses so we would look for a moat. Ah, we would look for stable. Ah, margins with the opportunity to expand those margins over time. What’s what’s really interesting is unlike my my peers who come from investment banking backgrounds. Ah I had an appreciation for what it takes to actually expand gross profit margins by 50 basis points right? It means. It means renegotiating contracts with vendors to drive down cogs on a unit basis I actually built that that skillset at Bcg working alongside the management team at a retailer renegotiating a vendor contracts. Moving over to to onx I could go in and understand what makes the model work and what makes a business model defensible where there’s opportunity to ah to drive ebada margin expansion or outsized revenue growth understand a competitive landscape. Um. Pricing discipline within a narrow competitive set all of these ah fundamental drivers of a business’s growth and profitability. Ah the understanding or appreciation was unlocked from the time of management consulting.

Don Muir: The actual finance and investing toolkit was built during the time at onix and those those skillets combined really did a great job preparing me for the issues that I’m facing today in my in my role at ark.

Alejandro Cremades: So so it sounds like you were having fun doing this private equity at at Onix so why shifting gears. Why did you go and and and put a pause and go ahead and study at Stanford the Nba. Yeah.

Don Muir: Yeah, um I I thought going to the Stanford was was a long shot I lobbed in an application after my second year at onyx and never expected to hear back. So somehow I I slipped through the cracks. But.

Don Muir: Gsb worked out and and I got the phone call and um and I was I was I was tempted and I jumped on a plane and flew to to Palo Alto where I stepped foot on the campus and for the first time my life I was inundated in this. Entrepreneurial environment that I had never seen before on the East Coast my entire professional and academic career prior to going to Stanford revolved around finance and investing. Um that was certainly not the case at Stanford. Working in private equity wasn’t cool going into investment banking is not what students did after graduating from the gsb my peers at Stanford I wanted to start companies or work at big tech companies or or startups and that was a completely foreign concept to me at the time.

Alejandro Cremades: And how did you know everything because I mean it It took a turn here your your career I mean you went from the corporate you know, kind of thinking or the corporate kind of path all of a sudden you know you find yourself launching your own company. So What were those sequence of events that needed to happen. In order for you to be able to bring arc to life.

Don Muir: Yeah, so ah, first of all I met my cofounders at the gsb and that was a huge unlock. Um, one of my cofounders lived across the hall from me. Ah at Stanford and we became close friends and he was working on a different startup idea. At the time. Ah my second cofounder Raven he he went to Stanford cs for undergrad he worked as a software engineer at Facebook and Tesla and and was technical lead at ah at ah, a venture of series b venture back startup before going back to the gsb he was advising every startup my class. So. When I met James Cur or the founder of Nx when I was on campus through ah through a ah mutual connection. Another startup founder who introduced us everything kind of came together I had this competing interest in in finance and entrepreneurship I had met my 2 co-founders at the time. And I had this idea I had this thesis that the founders in the ecosystem around me who I had met during my time on campus they were being underserved by the traditional financial services market participants that I worked so closely with in my prior life in New York I saw that startup founders even the cfos they didn’t have the same ah the same resources that were available to the private equity backed businesses that I worked with who had who ran auction processes against the largest investment banks and commercial banks and in New York for every financing transaction and so my unique insight was that.

Don Muir: There was this gap in the market and all the pieces were there around me my founders engineers my co-founders engineers to bring on the team and of course sources of capital and advisors like James at Nx who came in early and believed in me and my vision to disrupt traditional financial services.

Alejandro Cremades: Amazing and by the way for those that are listening that would like to hear more about nfx we had pit Pete Flint the co-founder there of n fix. You know, not long ago here on the podcast as well. So that was a great episode. So I guess in this case for the people that are listening arc you know. What is ark can you give us the business model. How do you guys make money.

Don Muir: Art’s a digital bank and we’re targeting the tech ecosystem. So what does a bank do a bank lens and stores cash. So those are our 2 products we have a vertically integrated lending business which we call arc advance. Within days a customer can convert its future revenue streams into upfront capital at the click of a button and then deposit those funds into a digitally native bank account which brings me my next product. Um, our cash. We have a robust cash management service where. You have maximum fdic s scpc coverage and you can invest directly in tbill’s money market funds insured cash suite programs effectively guaranteeing 100 % of your bank deposits will maximizing yield up to 5% apy on that idle cash. So like a traditional bank. We offer both funding and cash management services unlike a traditional bank. It’s digitally native. We have a slick ui ux and it’s fully self-serve so a tech founder Ceo or Cfo can log in initiate a wire issue cards to their team access capital and deploy idle cash. Across fdi seebacked high yield bank account products.

Alejandro Cremades: That’s incredible. Um, obviously you know like very relevant and we’ll talk about you know some of the issues that are happening nowadays that they you know are definitely fueling your guess’s growth now. 1 thing here that that I think will be interesting.

Don Muir: Right.

Alejandro Cremades: Is how much capital have you guys raised too late because you’ve raised quite a bit on the debt side and then also equity side.

Don Muir: Yeah, definitely. So ah, we’ve raised during the seed round $11000000 ah led by Nfx and Bain Capital and y combinator and others ah alongside that round I raised one hundred and fifty million dollars revolving credit facility from. Ah, Multibillion Dollar hedge fund um that’s my source of capital for the lending business. Most recently I also raised a $20000000 series a led by left lane capital out of New York so 31,000,000 of equity another hundred and fifty million dollars of of credit.

Alejandro Cremades: That’s incredible now. How do you go about debt versus equity on a business like this.

Don Muir: In terms of fundraising or in terms of of operations.

Alejandro Cremades: Like why would you raise debt money and and and also equity I mean what’s the purpose on both for a company like this.

Don Muir: Yeah, great question. So for all companies equity is the most expensive form of financing um equity assuming that you intend for your business to three x five x ten x one hundred x over time which every venture back founder aspires to do. Equities. You’re by far your most expensive form of capital with arc because we have this lending business I couldn’t afford to give away my equity dollars with the hope of of getting it back from from customers for the lending business. So I went out and raised a much larger pool of capital. From professional credit investors at a much lower cost and so we’ll pay interest expense on that debt and then we’ll we’ll lend it to to our customers at a slightly higher rate and the delta is my revenue the equity dollars meanwhile I’m using to actually. Ah, invest in randd invest in long-term long payback ah Roi initiatives at the company and so ah, the equity dollars which are more expensive I’ll deploy across higher npv. Um ah capital projects such as hiring engineers building software. Building platform value for the company meanwhile the credit facility will use to generate revenue in the in the immediate term and to acquire customers and bring them into the banking business.

Alejandro Cremades: So I mean it’s it’s incredible because you guys have raised a 150000000 on the debt side and then also the 31000000 on the equity side now on the equity side. You know like you were you were talking about it. I mean it’s it’s It’s incredible. The the amounts that we’re talking about here because on the seat round you guys raised 11000000 and then also on the a round you raised 20000000 both rounds you know above the typical seat or series a that you would see so how did you guys go like about storytelling with those investors to be able to. You know, kind of like show them where you were today where you wanted to be and how you’re how you were planning to get there.

Don Muir: The vision has been clear to me from the very beginning and for investors who are aligned with that vision. It’s clear that this is a multi-billion dollar market opportunity. You look at the public comps. Ah the large publicly traded financial institutions. Ah, they are all offline. They are not tech savvy these are this is hundreds of billions of dollars of market capitalization in the us tied up by Jpmorgan Chase in citigroup and Wells Fargo and bank of America and formerly Silicon Valley bank and first republic bank these. Product and user experiences underserve the tech economy and I saw that early I saw that because I worked at these I worked at these financial service institutions that I am now disrupting. Um. What I realized the the unique insight was that startup founders and their operating teams. So their cfos or head to finance or Fpa and a analyst they expect and quite frankly, deserve a finance stack that keeps pace with their business. They expect a consumer grade frictionless intuitive product experience on the front end and access to capital that you that you would get that you that you should get with a traditional offline financial institution because arc is software first it’s software driven business.

Don Muir: We can provide a very customized ah very customized product-centric experience for our tech customers leveraging backend api integrations machine learning artificial intelligence we can make faster better decisioning ah with a crisp, clean frictionless intuitive frontend experience and. And partner with the traditional offline banks to give access to those same financial products that you would get by parking your money with Jpmorgan Chase directly

Alejandro Cremades: So then let’s let’s talk about now that that we’re talking about you know Jpmorgan you know it just came to mind you know Silicon Valley bank right so I mean what? ah absolute craziness. You know that that situation created for the entire ecosystem and the level of uncertainty just say. just just just crazy so I guess you know what happened there I think that it has definitely helped you guys quite a bit not to like to to grow. So so what happened there and how has. You know that that that situation or they or the events that have unfolded from that really impacted the growth of of your guest’s business.

Don Muir: That’s a great question first and foremost I have a lot of close friends, professional acquaintances people that I respect and admire who were impacted by seb who worked at svb who I can who I remain close with to this day and it’s really a tragedy what happened? um. The bank and at the time arc was on the frontlines when the startup banking world imploded. We were the crew on the ship deck helping load passengers into the lifeboats. Um. As they were trying to flee when the titanic hit the iceberg right? So we were there with a frictionless onboarding experience helping customers move cash out of Silicon Valley bank while their Vc funds are screaming at them telling them to to get out to escape. Level of panic and hysteria on the market in the in the market is unfor. It was unforgettable and arc was positioned was very uniquely positioned with a fast onboarding experience to spin up Fdic insured bank accounts outside of svb in a matter of minutes and yeah we had um, we. We experienced explosive step function growth in terms of new logos in terms of bank deposits in terms of new Loan customers. The business up leveled on an order of magnitude of you know 3 to to 5 x and our our pipeline is is.

Don Muir: 20 x what it was ah two months ago and so we’re now in ah in a position where arc is a central feature in the in the startup banking ecosystem and I’m fortunate that we could be in the right place to help so many companies weather the storm. And um, yeah.

Alejandro Cremades: I mean that’s that’s incredible like 20 x the pipeline I mean they they the growth that you guys are experiencing. You know it’s it’s tremendous and I think that you know when you experience or you go through that you can also die from being too successful. So what are some of the steps. Or how do you guys think about this from a strategic lens and I’m sure that your experience at Bcg comes very handy to execute here.

Don Muir: Yeah, so I had a key decision to make at the time when on on Wednesday night when svv stock started to plummet in the after markets and I saw the writing on the wall. We knew that ah that outflows would be significant the following day. I started receiving text the following morning at 6 a m from founders and ceos panicked their vcs were pushing them to move all of their funds out of svb that day. Um, and we had a decision to make um the product was. 90% of the way there. Ah in terms of meeting the ask of the the customer. Ah and we were. We had a ga prepared to go live a month and a half later and I made the decision to flip the switch. We’re going live today. We spun up marketing collateral. Ah, we spun up a 10 more minute onboarding flow and we took every team member who was not writing code to ship the features that were necessary to protect with 100% search and t customers funds. Anyone who wasn’t engineering who wasn’t writing writing the code required. To meet the ask of our customers was on the phone with customers helping them onboard into arc helping them move their funds out of svb or frb or whoever whoever the the offline bank was that was potentially going to be impacted by the crisis and move those funds into a safe haven with arc into an Fdic.

Don Muir: S scpc or government-backed account. Um that ah that decision ended up paying huge dividends for our business and the team at arc really rose to the occasion they stepped up. They worked around the clock. Don’t think the team slept for for two weeks because the momentum really didn’t really didn’t die for another 10 business days and um, I’m really proud of the team for ah for rising the occasion and helping so many of our our prospects our customers other founders. Ah, who were in need of our services at the time.

Alejandro Cremades: That’s amazing now imagine Don because obviously it sounds like the the future you know or the strategic roadmap that you guys had you know put you know into the future. You know it sounds like you know you have achieved a. Like with with with high- flying colors already. Well you maybe you were projecting to achieve me in and a few years with all these craziness that has happened so I I think as we’re speaking about or thinking about the future thinking about vision as well. Imagine if you were to go to sleep to and I done. And you wake up in a world where the vision of arc is fully realized what does that world look like.

Don Muir: Sure arc is a publicly traded company alongside Jpmorgan Chase and Wells Fargo we’re banking and lending to the largest tech companies in the world but we haven’t neglected ah the startups who are who are just. Ah, who are just stepping in to their ah to the ecosystem we’re working with companies of all stages and our software allows us to do that. Um, we have a frictionless user experience paired with ah a hands-on white glove. Customer service. So a team of relationship managers who can work with you if you want to get on the phone with someone that that intersection of wall street and Silicon Valley is what’s missing today in the banking world in traditional financial institutions arc will provide. A broad suite of credit products from revolving credit facilities to term loans to revenue-based financing which is our core product today alongside an institutional grade cash management platform where we’re actually passing back one hundred percent of the value to our users ensuring that they are. Maximizing yield on their idle cash to ah to use for working capital to use for payroll to extend runway while also protecting those funds partnering with a broad network of offline banks to insulate cash across.

Don Muir: Dozens of Fdi see insured bank accounts at regional banks and large national banks.

Alejandro Cremades: My cat Done that that sounds beautiful and the level of detail that you provide I can even that’s it. It’s incredible, Incredible now Now we’re talking about here about the future and the vision I Want to talk about the past but doing it with a lens of reflection. So let’s say I’m putting you into a time machine now Don.

Don Muir: Sure yeah.

Alejandro Cremades: And’m and I’m bringing you back in time bringing you back in time to that moment where you were you know in Stanford and you are now brainstorming with your cofounders. You know what could be that solution that you could bring into a problem that you guys were envisioning. Obviously you know this led to work but let’s say you are able to sit. Your younger self there and you’re able to give your younger self one piece of advice before launching a business. What would that be and why given what you know now.

Don Muir: Don’t give up perseverance persistence. It’s everything in entrepreneurship you’re going to hear ninety nine nos before 1 yes But if you stay true to your vision and you listen to your customers. Your customers only not your investors your customers you talk to your customers you build for them. You don’t build for your equity investors or for your credit investors if you stay true to your vision. You find the fastmoving water is informed by your customers. So you might make slight deviations along the way. But the overarching thesis remains the same you will succeed and you might have 99 investors who don’t see that vision along the way for that 1 investor that nfx that left lane that adelaya who understands and appreciates what you’re doing and the problem that you’re solving. And if you stay focused on the customer and you persevere you will succeed over time through hard work. Ah and persistence.

Alejandro Cremades: I Love it so much for the people that are listening that will love to reach out and say hi. What is the best way for them to do so okay.

Don Muir: Yeah, you can follow us on Twitter join arc you can follow us on Linkedin where we post most of our new content and and products and then you can research on our website at arkdot tech

Alejandro Cremades: Amazing! Well hey Don thank you so much for being on the deal maker show today. It has been an honor to have you with us.

Don Muir: Thanks for having me This is awesome.

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