Startup formula for becoming an 'overnight success': Work hard. Get Lucky. Ride the Wave and then make sure to smile for the camera.
I got an email the other day from a CEO at a startup I advise who had applied for a startup accelerator called Impact Engine. The news in the email was not good. She had reached the last round of judging but didn’t make the final cut.
My advice to her was: don’t worry about. As a startup founder, there is so much that is outside of your control, that all you can really do is continue to work your tail off and eventually you’ll catch a few lucky breaks along the way.
Here’s an example.
In 2009, I fell in love with a venture capital firm called First Round Capital. A tweet from one of their associates had led me to a blog post, which led me to their website, which led me to theirholiday card video. If there is such thing as love at first sight with a venture capital firm, this was it. ”OMG,” I thought to myself after I watched the video, ”These guys are as weird as I am.”
So I decided to email them. It was the first venture capital firm I had ever reached out to and I had absolutely zero clue as to what I was doing. I wrote a stupidly long and wordy email telling them about GiveForward and asked for the opportunity to pitch. Within a day I got a very thoughtful response from an associate. He said no and that we’d probably be better off as a non-profit. A year later after graduating from Excelerate Labs, I reached out again to FRC to see if we could pitch and again the same associate said no. This time, he wrote that he appreciated the progress we had made but didn’t see this as a “venture type deal”. Another year passed, and then in April of 2012 I reached out to FRC again. This time, we got a better response. They agreed to hear our pitch and a few weeks later decided to co-lead our round along with Founder Collective. (hooray!)
Now, the funny thing is, last night I got an email out of the blue from the First Round Capital VC who I had written to all the way back in 2009 and 2010. I hadn’t spoken to him in two years and he has since moved on from First Round Capital to start his own VC firm. His email consisted of only one word. It said:
Moral of the story. In life and in startups, if you believe in what you’re doing, just keep doing it and with a little luck, eventually someone is going to notice.
I think this is particularly true with raising capital. As a first time entrepreneur, when you go to pitch investors you’re going to hear NO a lot more than you hear YES. When we did our angel round with GiveForward in 2011 we ended up oversubscribed, meaning that more people wanted to invest than we had room for in the round. Even so, the NO’s outnumbered the YES’s nearly two to one. (we pitched 45 investors. 16 said yes. 29 said no. 13 participated in the round). With our most recent round of funding that closed this past July, we ended up oversubscribed again. But we still heard NO eight times before we heard our first YES. NO’s are the default answer in the VC world. Rejection is part of the game. It doesn’t mean your idea is bad. It might just mean that your idea doesn’t fit within a firm’s investment thesis or the timing is bad for the firm or that your concept is “too early” and the market isn’t ready for it yet.
When I look back at GiveForward in 2009, we definitely fit into this last category of being “too early”. And to be honest, if I was First Round Capital, I probably wouldn’t have invested in us back then either.
Here’s what the landscape looked like in 2009:
- GiveForward, Kickstarter, and maybe three or four other crowdfunding sites exist; none of which have really taken off yet.
- Facebook, the main platform people use to share their crowdfunding pages, has a ‘paltry’ 200 million users
- The term crowdfunding is largely unknown. Most people in the industry were still referring to the space as “peer to peer fundraising”
Here’s what it looks like in 2012
- There are over 300 crowdfunding sites worldwide; Kickstarter has become a household name.
- Facebook now has about a 1 billion users worldwide sharing crowdfunding pages millions of times a day.
- The term crowdfunding has not only been popularized by the general public but President Obama has even passed a crowdfunding law called the JOBS Act with near unanimous support from Congress.
What a difference three years makes, right? GiveForward isn’t a fundamentally different company than we were in 2009, but in 2012 the public is now comfortable enough with the concept of crowdfunding to make market adoption a real possibility. And truth be told, we got really lucky with our market timing. Although we were a little early when we launched in 2008, we bootstrapped and stayed in the game long enough to be in the right place at the right time. In 2010 Kickstarter got funding from Union Square Ventures, putting crowdfunding on the VC map (thank you Fred Wilson). By 2011, Kickstarter had blown up and crowdfunding had officially arrived. And now in 2012…well, now everyone who got into crowdfunding early is just riding the wave and hopefully looking good when we smile for the camera.