Ray Smithson: AI Changed The Startup Math. Investors Changed The Rules

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Smithson shares what investors want, why bootstrapping may be a founder's biggest advantage, and how relationships can open doors that a pitch deck cannot.

Ray Smithson: AI Changed The Startup Math. Investors Changed The Rules

Ray Smithson GTM Podcast (https://go.fullcast.com/e3t/Ctc/I7+113/d2lPTz04/VWmwvN85yDX4W4bmllZ5NbsSpW7FnbcL5W6BKwN70Skv63prCCW95jsWP6lZ3lVW66Zx_c7dsLfRW5HlN3h1s2sn7W1gLHzy8xnh_CW7Bhj7j8_CZrnW5t7RK38mkTCYVHKRhL4b5xbvW6BDFPZ2H_CnvW30_dlL77cnQXW8SYHff9lc342W13XmVC6H6dwcVSDjB96lblWbM2FfPs4NHMXN1tRBWR6b86TW4LdWhW6wkwjJW6TTPVm6s5kKkW4VN_-j8CnLBxW2j7CpM792HhDW4QpKQr5-nD4fW1HrFc26pw0GZW1pQvRs7s1Vy4N8pgrnlFhzcRW3cH5_y64C0--W1LLZJn4Yqkz7W4FtBCR25qw2rW7Sp2cD7NVJjbW3rjqfk3SRj0JW3WNdPn6KBZnKW66nJz41hR9lHW1znmDl18fy6jW1bv75c2ZDVF0f2dG_pq04 )

Starting a company has never been easier. Artificial intelligence can write code, automate workflows, and help a handful of employees generate millions in annual recurring revenue. But there's a catch: The same technology making startups cheaper to launch is making them easier for competitors to copy.

Investors are noticing. A promising idea and an impressive pitch deck aren't necessarily enough to secure funding anymore. Founders need revenue, traction, defensible data, and a convincing answer to one uncomfortable question: What prevents someone else from building exactly what you've built?

On a recent episode of the Go-To-Market Podcast, host Dr. Amy Osmond Cook, CMO and co-founder of Fullcast, spoke with Ray Smithson, venture partner at Fraser VC and Omni Ventures and COO of Connect Capital.

Drawing on 15 years of startup and investment experience across the United States and Asia, Smithson shares what investors want, why bootstrapping may be a founder's biggest advantage, and how relationships can open doors that a pitch deck cannot.

Here are some interview highlights:

How did your experience in startups lead you into venture capital?

I've been involved with startups, both in and on the investment side, for about 15 years. I started with a bootstrapped startup during my undergraduate years at Utah State University. After graduating, I went to Taiwan, initially planning to stay for a year. That turned into almost 11 years.

While I was there, I founded startups in education technology and medical technology. We raised capital in Taiwan, worked with major technology companies, and helped college students secure internships.

Toward the end of COVID, I returned to Utah and became fascinated with the startup ecosystem. I started getting involved with a monthly pitch event called Third Thursday at Three, which has been running for about four years.

Through that event, I began seeing significant startup deal flow and helping founders prepare their pitches. Connect Capital, a nonprofit that has helped Utah startups raise capital for more than four decades, eventually partnered with us.

That experience also led to opportunities with Fraser VC, a family-office-backed venture fund with a long history of investing in Utah, and Omni Ventures, a Bay Area firm focused on advanced manufacturing and AI.

AI is everywhere. Are investors still excited, or are they becoming more selective?

Almost every startup seems to need some kind of AI component or agent. But one of the biggest changes I'm seeing is how much smaller teams can accomplish.

I've seen bootstrapped startups reach $1 million to $3 million in annual recurring revenue without taking on venture capital or angel investment.

They're doing it themselves, with very small teams.

That's a significant shift. These companies are becoming much more capital-efficient, and it's changing the point at which they need to seek outside investment.

It's impressive to see a company with just a few people generating a million dollars in annual recurring revenue.

You learned the founder-dependency lesson firsthand, didn’t you?

I did.

Three years before we sold my company, somebody came to me and offered me a ridiculously low number. That forced me to look at the business differently. I realized the problem was the guy in the mirror. I had made myself too important to the business. That experience changed how I thought about building the company and eventually selling it.

What's one of the biggest mistakes founders make when seeking venture capital?

A lot of people approach it as, 'If I just get investment, then people will want to give me money and see me grow.’ But founders need to understand what taking investment actually means. Once you accept venture capital or angel investment, you're creating an expectation that investors will eventually have an opportunity to realize a return. That typically involves some kind of liquidity event, whether it's an acquisition, merger, IPO, or another form of exit.

If investors see that you've never considered a potential exit, they're going to wonder how they'll ever get a return on their investment.

There's nothing wrong with building a lifestyle business that generates income and grows over time. But that's not typically what venture capital investors are looking for.

They want to see something with a revenue engine that's already getting revenue, and then they want to put some jet fuel on it. Founders need to understand that distinction before pursuing outside capital.

Beyond revenue and traction, what should founders do before approaching investors?

Build your network out before you even think about funding. People do business with people they know, like, and trust. If you're starting from scratch and immediately pitching everyone you meet, fundraising becomes much harder.

Instead, build social capital while you're bootstrapping and growing your revenue. Attend pitch events. Go to investor gatherings. Get to know the people in the ecosystem.

Too many founders approach an investor and immediately start pitching without even taking the time to establish a relationship. You have to remember that investors are people, too.

Investors typically bet on the jockey, not the horse, because a pivot can happen and the company can be totally different. An investor wants to understand who the founder is, how they think, and whether they're capable of navigating change.

Talk about your company, certainly. But don't hard-pitch every person you meet. Build connections over time, with multiple touchpoints. Those relationships can make an enormous difference when you're eventually ready to raise capital.

Revenue Gets Attention. Defensibility Earns Confidence.

Smithson's perspective reveals an important shift in the startup economy. AI has dramatically reduced the resources required to launch and grow a company. But the lower barrier to entry has created a more demanding investment environment.

For founders, the opportunity is to prove the business before asking investors to finance its potential. Generate revenue. Establish traction. Secure differentiated data and relationships. Understand what investors expect in return.

And perhaps most importantly, remember that funding is not the finish line.

As Smithson explains, investors are looking for a working revenue engine they can accelerate—not simply an idea they can afford to support.

Listen To The Full Interview Now!
(https://go.fullcast.com/e3t/Ctc/I7+113/d2lPTz04/VWmwvN85yDX4W4bmllZ5NbsSpW7FnbcL5W6BKwN70Skv63prCCW95jsWP6lZ3lVW66Zx_c7dsLfRW5HlN3h1s2sn7W1gLHzy8xnh_CW7Bhj7j8_CZrnW5t7RK38mkTCYVHKRhL4b5xbvW6BDFPZ2H_CnvW30_dlL77cnQXW8SYHff9lc342W13XmVC6H6dwcVSDjB96lblWbM2FfPs4NHMXN1tRBWR6b86TW4LdWhW6wkwjJW6TTPVm6s5kKkW4VN_-j8CnLBxW2j7CpM792HhDW4QpKQr5-nD4fW1HrFc26pw0GZW1pQvRs7s1Vy4N8pgrnlFhzcRW3cH5_y64C0--W1LLZJn4Yqkz7W4FtBCR25qw2rW7Sp2cD7NVJjbW3rjqfk3SRj0JW3WNdPn6KBZnKW66nJz41hR9lHW1znmDl18fy6jW1bv75c2ZDVF0f2dG_pq04 )

Want more insights like this?

We drop brand new episodes of the Go-To-Market Podcast every Wednesday to help you keep your revenue engine running hot.

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build vs buy (https://go.fullcast.com/e3t/Ctc/I7+113/d2lPTz04/VWmwvN85yDX4W4bmllZ5NbsSpW7FnbcL5W6BKwN70Sks25m_5PW50kH_H6lZ3nfW7dhVTv8CTrxfW4qKhKT3Kzw9BW8K4HLC5qMNfGW4CTZb42rbVBbW2jLKYd28Q5vlW32HHn35QS2LZVd5K8q1xdlHmN3LsPGghKZv_W8L6lwL1P5D5xW2wq0KK1YCt08W8Sw-RY8V-81qW8fJFp-4T8jMtN17DTxY3m5W7W5Hncmt1bpgDCMkQdtPjBJ33W5nD9xL3s3LxbN17CbVghvmLkN8cwd52Pz9zcW3TL2Tk2C0QrSW3ZYS_48W3bJYW1TthD215vX5-W486XYY2dhkhtW5Flz_p94FZyZW94SVKd93-cXNW6fYLlV7yBrThMdFklJp8kn5W7Kmqtw6k0zhFW89HmvL3nY_XFW71S6441njZs0VdKlw52R_T3_W5866_k8x-lKYW2sYnbm6LxHMsf5lpgMC04 )

Every RevOps and GTM leader is facing the same question right now: build it with AI, or buy the platform built for the job? Fullcast surveyed nearly 100 senior revenue operators, 97% Director-level or above, to find out how they're actually making that call.

This is a de-identified, question-by-question analysis built for the people who actually own these tooling decisions. Whether you're deciding what to build next quarter or trying to bring some structure to a decision that's currently made ad hoc, this report gives you the data to back it up.

Click here (https://go.fullcast.com/e3t/Ctc/I7+113/d2lPTz04/VWmwvN85yDX4W4bmllZ5NbsSpW7FnbcL5W6BKwN70Sks25m_5PW50kH_H6lZ3nfW7dhVTv8CTrxfW4qKhKT3Kzw9BW8K4HLC5qMNfGW4CTZb42rbVBbW2jLKYd28Q5vlW32HHn35QS2LZVd5K8q1xdlHmN3LsPGghKZv_W8L6lwL1P5D5xW2wq0KK1YCt08W8Sw-RY8V-81qW8fJFp-4T8jMtN17DTxY3m5W7W5Hncmt1bpgDCMkQdtPjBJ33W5nD9xL3s3LxbN17CbVghvmLkN8cwd52Pz9zcW3TL2Tk2C0QrSW3ZYS_48W3bJYW1TthD215vX5-W486XYY2dhkhtW5Flz_p94FZyZW94SVKd93-cXNW6fYLlV7yBrThMdFklJp8kn5W7Kmqtw6k0zhFW89HmvL3nY_XFW71S6441njZs0VdKlw52R_T3_W5866_k8x-lKYW2sYnbm6LxHMsf5lpgMC04 ) to download the ebook today!

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Did you hear? Fullcast published a book!

The RevOps Advantage reveals how the best revenue teams operate like world-class pit crews–driving alignment, executing seamless handoffs, and making every move data-driven.

Co-authors Ryan Westwood, Dr. Amy Osmond Cook, and Bala Balabaskaran break down why nearly half of RevOps leaders are investing in AI for sharper insights, and how you can use automation to deliver the accelerated growth your board needs.

Amy Osmond Cook, PhD

Cofounder and CMO at Fullcast (https://go.fullcast.com/e3t/Ctc/I7+113/d2lPTz04/VWmwvN85yDX4W4bmllZ5NbsSpW7FnbcL5W6BKwN70SktR3prCCW8wLKSR6lZ3lrN2-b9dD38GwpW51Ddmh8k3yLgVyH1pM2jvLbgW1M3TsX7pB107W2KfFj_5QD0_XW4XN2Jr2Prf03W2cTgMk4h7P6mW2ZdWjh1Yq5q9W6y726D5vwwT0N3fX9Sp87SMbVNr9Jq23V-dWW12GW3M89ktvdW2wlTpJ25PCxCW7lqkyx5KVl4sVKK2B192BY0JW8SFCXf5yB-TlW5_6w705qHs1gW3l4zp37XVhSpW6KSk-b8ygMSsW436d5-74QdlMW534LGG9jcrK3N8XPg5MNjPFkW17fM3x7F3mZnW66r5fv3RNq4rW2Q-HKF40y1KNN2z35WSgzRPKW79_P3C7XxGSYW85lmL02XQC5Ff1d4yKM04 )

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14 October 2026 · 16:00 UTC