How Plasso’s Drew Wilson raised $1.2M for a payment subscription business
This post is part our interview series with founders who raised money on AngelList.
- He waited until he had $20K/month in revenue and double-digit growth before he started fundraising
- Entrepreneurs wanted to invest for the same reason VCs and angels declined: No other company has made an easy subscription payment product yet
- He raised an additional $800K from an investor in his AngelList syndicate after sending out his first investor update
AngelList: How did you come up with the idea for Plasso?
Drew Wilson: Trial and error. I’m a self-taught designer-developer and have built and bootstrapped over 30 products by myself since 2007. I first built an e-commerce platform called Quixly to help sell icons I designed online. I made a lot of money from selling the icons, but the platform itself was a failure. Then I built a human interface for Stripe called Space Box. But the business model wasn’t quite right, and I couldn’t make money from it. So I tweaked the business model, feature set and niche I was going after, and launched Plasso.
How did you grow Plasso once you launched it?
It grew gradually over two years, 100% word of mouth. I spent most of my time improving the product — customers would write in, and I’d talk to them about what they wanted. I’d try to merge requests to come up with feature sets that work for many people and then build those.
It took a long time to expand beyond my Twitter-sphere of influence. Now, people all over the world use the product — from taxi companies in London managing their monthly membership fees, to gaming arcades in Brooklyn, to people selling advice on subscription.
At what point did you start to think about raising money?
I was doing everything — every line of code, every pixel, every support email, everything. It got to the point where I couldn’t keep up, so raising money made sense to hire people and make things faster for our customers.
One of the key things that I always held myself to is not taking investment unless the product itself had legs and was growing on its own.
One of the key things that I always held myself to is not taking investment unless the product itself had legs and was growing on its own. I knew from trying so many different things that I can’t just assume something is going to work, and I don’t have to take a bunch of money to find out later. I’d rather fail on my own and learn that lesson. I didn’t want to spend my time forcing some product that wasn’t going to work.
What were some of those signals that convinced you the product was working?
I was making $20,000 per month, and that was paying for myself and then some. We had 460 customers selling subscription products every month, and we were growing 13% per month.
I reached a point where Plasso was doing better than anything else I’ve done previously, and I felt this was something to go big on, raise some money, build a team around it.
Okay, so you’ve built something, and it’s pretty clear to you that it’s working. You’re swamped and need to hire people and raise money. How did you go about that?
First, I moved to San Francisco. I heard stories about how difficult it is to raise money where I live in San Diego.
My first meeting went horribly. I thought a seed round would be a casual conversation and that I didn’t need to prepare. But I got ripped apart by a high profile angel for an hour and a half. They wanted a structured pitch and all this data.
So then I made a real presentation. The second meeting, with another very well known angel Alex introduced me to, was totally different. Before the meeting, he said, “Just so you know, before we even start this, I’m going to invest.”
So I thought, “Wow, this is going to be easy, I’m going to get a bunch of money in like a week.” But that was not the case.
How did you find the syndicate experience?
It was amazing. I didn’t do much. Jude did everything, and all I had to do was email him to ask how it was going. In the end, he emailed me saying, “Here’s how much we made.” And the money was wired to my account.
How did the rest of the round go?
I wanted to get other entrepreneurs who were building stuff, so I trawled AngelList and cold-emailed a few people. I ended up pitching all over the place, multiple times a week. I probably pitched to 80 people, and twenty ended up investing. But after six months, I had only had raised $300K. So, super discouraged, I went back to San Diego.
Then I sent off my first investor update, and one of my current investors liked it so much, he decided to invest a lot more. I had never met him because he invested through the AngelList syndicate. He emailed and was like, “Hey, this is awesome. We want to invest another $500K, and I want to bring my buddies in for another $300K”. So from that first email I got from him, within 24 hours, the money was already wired into my account. Insane.
That happened five months after my first investor meeting, and I was up to $1.2M. I was like, “Yeah, I’m done. Back to building.”
What part of your pitch resonated with investors?
The fact that no other company had made an easy subscription payment product. 100% of the “no’s” were because of this reason. But for the investors that did invest, it was the most attractive thing about the business to them — that this is something entirely new.
This also resonated with the investors that were former entrepreneurs. They wanted to jump into something new and be risk takers. People I got “no’s” from, like VC firms and some angels, seemed to be less like entrepreneurs, and were more looking for the next big rocket ship.
Anything you would have done differently if you could do it again?
Make the pitch itself fanciful, for lack of a better term. Don’t talk about the potential snags your business could run into in your pitch deck. Focus on the positive. Wait for the meeting to go over what’s tough about it.
I would also have practiced my pitch in front of my friends first. If I had done that, one of them could have told me much earlier on in the process, “This is not a pitch.”
What’s next for Plasso?
We’re working on front loading our next nine months with a bunch of new features so we can launch our first new thing this fall, and something every two weeks from there.
Originally published at blog.angel.co on September 7, 2016.