David Karandish has gone from young entrepreneurial side hustles to raising over $150 million, and now launching a new startup ecosystem which includes his new AI startup, Capacity, after selling Answers.com company for almost $1 billion.
From learning to code at an early age to launching an AI venture that is supporting the new world we live and work in, David Karandish has learned a lot about capital fundraising, the different stages of a business, building a sustainable company and M&A.
In his recent appearance on the DealMakers podcast, he talks about his journey, the ups and downs of entrepreneurship, what you really do when you sell a company for a billion dollars, what he wishes he could tell his younger self, and many more topics.
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Karandish was born and raised in St. Louis, MO. When his father’s company was throwing out all of their old computers, he brought one home. David used it to learn how to code.
In high school, he would design web pages for people. Which was somewhat of a magical power back then.
He then went on to major in computer science and entrepreneurship at Washington University in St. Louis.
He and his business partner kept hustling and coding. They developed a plugin for AOL Instant Messenger. They built an e-commerce website selling celebrity apparel, ran a blog and fashion review site. They even created a lead generation site for the financial services industry.
In the final semester of their senior year, they set out to network and meet new people. They stumbled on a casting call for the Apprentice TV show. They tried out and Karandish became one of the youngest people to appear on the show. This happened to be the special season with Martha Stewart.
David made use of the time on the show to build connections and ultimately pulled off a deal with Yahoo to fuel their shopping comparison site business idea, Find Stuff.
Raising Money and M&A
Find Stuff went on to become Announce Media and AFCV Holdings. They grew fast but were very aware of the fact that their business was heavily reliant on just one partner, Yahoo.
They began shopping for a company that had organic traffic and they found Answers.com. It was a chance to diversify revenue, expand advertising partnerships outside of Yahoo, and diversify traffic.
They hired a bank, flew back and forth to Israel, where Answers.com was based, and started merging the two companies together. At $20 million, and with all organic traffic, it was close to acquiring $19 million in gross profit every year on autopilot.
Having completed several other M&A deals and roll-ups in the industry, David shared with the DealMakers’ audience some of his key checkmarks for due diligence when shopping for an acquisition.
- A business that has multiple ways to grow
- Something within your budget
- A brand which you can hang the rest of what you are doing underneath
Answers.com ultimately became the parent brand for everything they did, thanks to its great visibility.
Through this stage of the business Find Stuff raised at least $150 million. That ran from angel investors to VCs, private equity, and a sizable debt facility.
His quick breakdown of what to expect at each round is:
- Angel funding is very much betting on the jockey
- VCs will take more risk than PE, but typically still want to see you’ve passed the idea stage
- Private equity want to protect a lot of the downside and get a strong return for their investors
- Debt facilities don’t participate in the upside. All they care about is to make sure that you pay them back
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
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