Gathering $350K : A journey through our seed funding
Last week, we announced our seed funding with amazing business angels. This is the story of how we hustled to fund our startup.
I’ll skip the part where Jean-Baptiste and William, my cofounders, and me, were fed up with our lousy jobs and decided to solve a problem all of us have : administrative tasks, beginning with expense reports, and start when we joined a French acceleration program — Le Camping.
It all started 6 months ago. We joined Le Camping, known to be the first and most selective accelerator in France (5% acceptance rate). Very much like its US counterparts (TechStars, YC, etc.), it ends with a Demo Day. Each startup, has 5 minutes of glory to pitch in front of a 200 investors crowd.
January 2015. Elise, manager of Le Camping, and Phil Waknell, pitch expert, asked me how much I wanted to raise. I had no fucking idea.
Here are our five steps to our fundraising.
1- Do your benchmarking homework
They advised me to find out how much other startups from previous seasons, with similar progress, raised after being part of our acceleration program. 200k€-300k€ seemed to be reasonable for a rather early-stage startup like ours. We had only 7 months of existence, no particular track record with no really proven revenue model since the app was free for beta-testers.
They also told me to think about the valuation, inevitable question that investors would ask me. Again, let’s benchmark… 300k€ with 900k€ pre-money valuation seemed to be the classic and fair package for French investors.
2 — Challenge yourself to validate assumptions
I felt not quite confortable though… Why not 400K€? And why not 500k€? Was 300k€ even possible for Birdly in January 2015? For an engineer like me that likes proofs, was I going to gamble my company, my life on such irrational factors?
We finally took the decision to see it by ourselves and to choose afterwards, based on proven facts. During the Demo Day, happening a month later, we decided to announce an amount approximately threefold what we could handle to find. We had one month to find at least 100k€!
3 — Surround yourself with great people from the beginning
It was thus the perfect timing to reactivate all mentors and potential investors we met during the 7 intense first months of Birdly. We’ve met many great people during the acceleration program, and some of them told us:
“Do not meet investors too soon, you’ll give a bad image of your startup”
and other told us to
“Meet them as soon as possible, they will measure the progress and they will trust you in the long term : time is the best due-diligence”
I couldn’t really tell you what my opinion on that matter is, but one detail makes me think the latter might be right: our first investor was the first person we ever met when we started Birdly, thanks to personal introduction. For a whole year, he has witnessed our progress and motivation in this project. He saw our progress since our first meeting when we had only a few slides.
Our second investor was also someone we met in the beginning of our journey : Nicolas Thenoz. Nicolas was the founder of iNotesdeFrais, a famous French mobile app dedicated to expense reports. The app was covered by journalists many times, he had traction (around 150k downloads in 3 years), thousands of positive review in the Appstore and yet…he failed.
He lacked a team, and saw in us everything he missed: a complimentary team backed by a prestigious accelerator and great mentors. It was an explosive cocktail. Then, with those two investors, 1 week before the Demo Day, we had our 100k!
Now, at last, we felt comfortable telling the world we were raising three times this amount!
4 — Cry a bit, hustle a lot
We had it right on the first time, but we were ready to change if we couldn’t have 100k€. So 300k€ it was, it was challenging to reach, but attainable at the same time ! We were the only one startup that announced our fundraising with commitments, we naturally caught their attention.
Here is the full video of our 5 min pitch :
https://www.youtube.com/watch?v=fHANorlAmLI
Se we had the amount, the valuation. The third parameter we had to figure out was the timing. When was the deadline to raise these 300k€? We had found a third of the amount in one month, so we decided to spend two more months on it.
By the end of March, it had to be finished.
During the two weeks after the Demo Day, we clearly had momentum. I met almost 30 potential investors, most of them in the network of our acelerator. Then, for 3–4 weeks, nothing… We were crossing the desert.
Among those 30 investors… no one would agree to invest :
too early, no proven acquisition strategy, not a big enough competitive advantage…
We were already 5–6 weeks past the Demo Day and almost at the same point: 100k€. I think it was one of the toughest moments in the history of Birdly. The worst part is that most of investors that denied do not dare telling you what’s wrong straight to your face. Sometimes they don’t know, sometimes they just don’t have the honesty to tell you what they really think. But enough crying, we had to find a solution instead.
So we had an idea to involve other types of investors.
For 7 months, during our acceleration program, we wanted to share our journey with our friends and families. We have been sending them long mails with plenty of pictures every two weeks to share our best and worst moment.
They clearly knew where we were and our goals.
With JB and William, we had long hours debating about this idea :
What if we fail and they loose their money, will they be mad at us ?
Our case was even trickier because we had, the three of us, many friends in common…
Will, diners with friends, become board meeting?
We finally decided to ask them if they were interested in investing in Birdly.
Another example of the lesson learnt before (“time is the best due-diligence”) : almost half of our mailing list agreed to invest 500€ or more. We gathered 40k€ from 28 investors and decided to group them in one legal entity to simplify decision in the future. We were now almost half-way.
5 -Help potential investors follow your journey
From the beginning of our fundraising journey, we had been sharing our adventure with every investor we met thanks to a weekly newsletter. It was a really good decision since, one investor we met on the very beginning, took 6 weeks to decide but he finally agreed to invest 60k€. It was realeasing, we finally had about 200k€. And guess what? The last 100k€ was way much easier !
We finally convinced 9 investors (from 15k€ — 60k€) :
- 4 investors from our schools : HEC, Supaero, Polytechnique
- 2 investors from Le Camping Network
- 3 investors from the network of Fundme
- And 1 group of 28 investors from our friends and family
Now, it 4 months after, we’ve been working on the closing, legal stuff, and we decided to wait until the end of the summer to tell the world about how we’re happy. In the meantime, we continued to work on our mobile application, it had ups and downs in AppStore; we’ve been featured 2 or 3 times by french magazines and we hired a rockstar team.
Also, two months ago, the day we received the money on our bank account, we decided to pivot. But that alone deserves another article!
