The New Norm in Funding
That’s the headline. But it’s not the story.
In 2015, we set out to build a start-up with high-growth ambitions, profits, and a shattered glass ceiling. We wanted a company that customers absolutely loved.
Thirty months in, our start-up was close. As close to dying as we were to really cracking the code.
We needed capital. Just enough to make us dangerous. But, no more.
When we looked around at the venture landscape, it was a mirage. Unicorn futures and founders slurping the TechCrunch, ego-driven, hype-flavored drink that traditional early-stage venture sells to Silicon Valley.
Is this our option — should our start-up really be on the same funding path as HQ Trivia? We’ve made $1M, we know our margins, and while we cannot scale overnight, we could deploy quickly.
Silicon Valley, New York City, and Boston are start-up meccas that cities like my hometown of Washington, DC emulate. But, we do not have the exits, the check-writing angels, and the risk tolerance of those ecosystems. To be fair, we do not have the founder talent either. We pretend we do, but the overall numbers paint a more accurate picture.
In fact, if most (read: 99.97%) venture-backed companies do not make it to venture scale, why would we as founders choose this funding path? This route takes four rounds (friends & family, pre-seed, seed, bridge) — four rounds—to get to Series A.
The problem is that like everything else, the traditional, early-stage venture model had good intentions to scale companies. There have been massive successes. But now, most start-ups sign up for this venture path knowing that their company will most likely die by suicide. In fact, these founders commit a version of hari-kari which is published as a post on Hacker Noon.
The odds are not in most of our favors. Venture cannot be growth hacked, at least for most of us.
Plus, chew on this, folks in the back. The collective venture world sent 98% of their dollars to fund the visions of men in 2017. This is not a world for our start-up to succeed.
Plum Relish is a female-founded company; it is a statistical anomaly to raise venture capital in Washington, DC with a female CEO.
So, to believe these stats and to follow a traditional venture path is to bet against — ourselves. We could not let that happen.
There’s one thing I’ve learned to be true: persistence is a competitive advantage. It fosters frugality, creativity, innovation, and deep soul-searching. All of these factors have led us on our current path.
This is why it took one tweet to change our trajectory. So, here’s the clickbait you scrolled for…
Late one night, I saw a tweet promoting a Founder Field Trip at Wistia’s Boston headquarters. I was curious and I applied. I got invited and found my people. We had lunch. I returned to DC and decided I wanted money from the guy and his team who organized it.
Conviction and grit are just as important in investors as they are in founders. In Boston, Bryce Roberts told his ten-year tale of seed investing, how it was pioneered, and why it was broken. He gave away lighters like business cards, symbolizing his infamous screenshot of a burning unicorn. I gulped it up. Contrarians are my people.
If I had not followed Bryce on Twitter and had not taken the five minutes to check out what he was slinging on special, I would never have gone to Boston to seek the funds from O’Reilly AlphaTech Venture’s (OATV) Fund IV, Indie.vc. OATV seeded Foursquare, Bitly, CodeAcademy, LearnZillion, Fetch Robotics, and Hipcamp among others. With the Indie.vc fund, Cotton Bureau and The Shade Room jump off the page. This is a club to join!
Within a few days of returning to Washington, DC, I asked Indie.vc for their money, their fancy convertible-note like structure, and answered their questions. There was no unfounded pushback on “traction”, or that our sector is a dog for funding right now, or that I did not have an exit plan. The opposite became true. They loved our client-at-the-center approach, our drive to being a real business, and how we bootstrapped/survived through two-ish pivots. They believed in our business as we have built it.
I offered my wiring information. Stockpiled some tea, looked at our bank account without wincing (per usual), and got back to work. It was a relief. We took the money and ran.
It is a privilege to build a company.
The Indie.vc ethos is about the cost of freedom at this stage — it’s about subscribing to an alternative funding choice.
So, when you cannot find what you are looking for, look harder.
You may even find the answer on Twitter.
Sarah Van Dell is the CEO and Founder of Plum Relish, a Washington, DC-based start-up that has created a way to unleash the flavor of your city’s favorite restaurants into bento-size lunches for the workday.