Angie Ma's Faculty succeeded by first solving a niche hiring problem: placing talented but commercially inexperienced PhDs into companies. This initial service business generated revenue, giving them leverage to raise a $60M war chest on their own terms and eventually build a scalable AI product.
Key takeaways
- Leverage early service revenue to fundraise from a position of strength.
- De-risk hiring for companies with a 'try-before-you-buy' model.
- A great idea is worthless without a world-class team.
- Don't be afraid of a non-linear career path to find the right problem.
- Use early traction to select investors who align with your long-term vision.
- Pivoting from a service to a product business is a major, deliberate shift.
Your First Business Model Doesn't Have to Be Your Last
Angie Ma’s journey to raising $60M for her AI company, Faculty, wasn’t linear. It involved a failed startup, a detour through law and academia, and an initial business model that looked more like a recruiting firm than a software company. Her story is a masterclass in finding a wedge into a market, using revenue as leverage, and making the difficult transition from services to a scalable product.
Born in Beijing, educated in Hong Kong and the UK, Angie’s path was anything but predictable. She switched from engineering to physics, driven by a desire to understand the world at a fundamental level. This intellectual curiosity would become a key asset, but it didn't immediately translate to business success.
The Most Important Lesson: An Idea Is Not a Business
During the dot-com boom, Angie and a few friends jumped into the startup world. They identified a real technical problem: slow e-commerce sites caused by unoptimized databases. They had a promising idea to fix it and even landed a few initial customers.
But the venture quickly fell apart. The reason? A lack of experience in building and managing a team.
This is one of the most common and painful mistakes founders make. You get obsessed with your idea, your code, or your deck, and you forget that a startup is an organization of people. Without the right team, aligned and capable of executing, the best idea in the world is worthless.
The common mistake: Believing a clever idea is enough. It isn't. Execution is everything, and execution is done by a team. Your first job as a founder is not 'Chief Visionary Officer,' it's 'Chief Recruiter and Team Builder.'
The Insight: Finding the 'Unemployable' Geniuses
After her first startup failed, Angie explored law and academic physics. While intellectually stimulating, she found academic research too slow and disconnected from real-world impact. Meanwhile, her co-founder, Matt Gorenstein, saw a program in the US helping academics transition to industry. A lightbulb went on. In the UK, nothing like it existed.
They had found a painful, specific problem they both understood personally. STEM PhDs, despite being brilliant and highly trained, were often seen as 'unemployable' by the commercial world. They were in their late 20s or early 30s with no industry experience. Their resumes didn't fit the standard corporate mold.
Faculty was born from this insight. The initial plan wasn't to build a grand AI platform, but to solve this immediate, tangible pain point.
Go-to-Market Genius: The 'Try Before You Buy' Model
Faculty’s first product was an eight-week fellowship. It took STEM PhDs and trained them for the commercial world. The core of the program was a six-week project with a real company. This wasn't just education; it was an innovative hiring model.
For PhDs: It was a free, risk-free way to get real-world experience and prove their value. · For Companies: It was a 'try-before-you-buy' approach to hiring scarce, expensive talent. Instead of making a six-figure bet on a resume, they could see a candidate in action on a real project. This dramatically de-risked the hiring decision.
Faculty charged the companies a fixed fee for the service. From day one, they had a business model that generated revenue. This simple fact would change their entire fundraising trajectory.
Fundraising with Leverage: How Revenue Changes the Game
When Angie and Matt went to raise their seed round around 2016, the European venture scene was still developing. But they had an advantage most founders only dream of: revenue. It wasn't SaaS revenue, but it was real money from real customers who found their service valuable.
Mistake: Fundraising with Just a Story
Most pre-seed founders have nothing but a deck and a dream. They are asking investors to take a pure leap of faith. This power imbalance means they often have to accept unfavorable terms, take money from funds that aren't a great fit, and give up more equity than they should.
The Power of Early Revenue
Faculty's service revenue proved the market. It showed there was real demand for bridging the gap between academia and industry. They weren't just telling a story; they were showing traction. This allowed them to be selective.
Being 'selective' with investors doesn't just mean picking the one with the best brand name. It means you can hold out for a partner who shares your vision and offers founder-friendly terms.
'We are currently a services business. The transition to product will be capital-intensive and may look messy for a few quarters. Are you comfortable with that journey?' · 'What is your view on building a long-term, sustainable business versus a rapid flip?' · 'Can you introduce me to a founder in your portfolio who had to pivot? I’d love to hear how you supported them.'
Because they had options, they could wait for the right fit. They chose Local Globe, which has since become one of Europe's most prestigious seed funds. They had found investors who bought into the long-term vision: using the fellowship as a wedge to build a much larger AI company. Years later, they raised a growth round from Apax Digital, ultimately securing $60M in total funding.
The Hardest Pivot: From Services to Product
The article notes that Faculty 'evolved to provide AI solutions for organizations.' This is a deceptively simple sentence that hides one of the hardest transitions in the startup world: moving from a services-based model to a product-based one.
Why It's So Hard
A service business and a product business have different DNA.
Services: Your assets are your people. You sell time and expertise. The business is linear—to make more money, you have to hire more people. Margins are typically lower. · Product: Your asset is your code. You build once and sell infinitely. The business is scalable—you can add customers at near-zero marginal cost. Margins are high.
Successfully making this pivot requires a deliberate, and often painful, cultural and operational shift. You have to learn to say 'no' to custom client requests, invest heavily in R&D that doesn't pay off immediately, and build a completely different sales and marketing motion.
Faculty used the data, relationships, and capital from its service business to build the foundation for its product. The fellowship created a world-class talent pool (over 500 alumni) they could hire from and a deep understanding of what commercial clients needed from AI.
How to Apply This This Week
Re-evaluate your 'unhirable' talent pools. Are you overlooking candidates from non-traditional backgrounds (academia, military, different industries) who have raw problem-solving skills? A short, paid project is the best interview you can run. · Find your 'service wedge.' If your product isn't ready, is there a high-value service you could sell to your target customers right now? It can validate demand, generate non-dilutive cash, and give you leverage for your seed round. · Audit your investor conversations. Are you just taking any meeting you can get? Or are you running a process to find a true partner? Prepare a list of 'vision alignment' questions and don't be afraid to ask them. The best investors will respect you for it. · Assess your team. Read the story of Angie's first failed startup again. Is your team cohesive? Are you brutally honest about skill gaps? A-level execution is the only thing that matters.
Frequently asked questions
- What was Faculty's initial business model?
- Faculty started with an innovative education and hiring program. They ran an eight-week fellowship to help STEM PhDs transition to commercial roles, placing them with companies for a six-week project. Companies paid Faculty a fee for this 'try-before-you-buy' talent model.
- How does having revenue change your fundraising process?
- Having revenue, even from services, puts you in a position of strength. It proves market demand and gives you the leverage to be selective, choosing investors who align with your vision and offer clean term sheets, rather than just taking any money you can get.
- What is a 'try-before-you-buy' hiring model?
- It's a model where a company can work with a potential hire on a short-term, paid project before committing to a full-time offer. This de-risks the hiring decision for both sides, ensuring a good fit on skills, culture, and expectations.
- How much did Faculty raise and from whom?
- Faculty has raised $60 million to date. Their first institutional investor was Local Globe, a top European seed fund, and they later took a growth round from Apax Digital.
- What's a common mistake early-stage founders make?
- Focusing too much on the idea and not enough on the team. As Angie Ma learned from her first startup, a brilliant concept is worthless without a cohesive, skilled team to execute it.
