EXCLUSIVE INTERVIEW: Steven Plappert, Co-Founder & CEO of Forecastr 🤑💹📈📉💰💵

Keeping the American Dream Alive

Welcome to the 118th edition of Start-up Society! Check out the previous issue, if you have not already, here.

Recently, our very own Arteen Zahiri had the pleasure of speaking with Steven Plappert, Co-Founder & CEO of Forecastr for an exclusive episode of Meet the Entrepreneur. From launching a startup in college to participating in Techstars (twice) to raising millions of dollars in one of the most difficult fundraising environments, Steven blesses us all with a wealth of knowledge and insights in today’s feature.

This article provides a summary of the conversation. For the full details, tap into the podcast here!

‎Meet the Entrepreneur: Meet the Entrepreneur #30 - Steven Plappert, Forecastr on Apple Podcasts

Steven’s background and origin story

Steven is a Kentucky native, through and through. He considered venturing out for college — he was originally going to enroll at St. Louis University — but ultimately stayed home. He graduated from the University of Kentucky, where he earned his bachelor’s in Mathematical Economics. Steven has always been a “math guy,” so when he looked at the financials, going to college in-state was a no-brainer (and his parents’ bank account thanked him for it).

Steven originally had aspirations of working in big finance as a Portfolio Manager, but things quickly veered in another direction when he launched a tech company in his college dorm room. He has been fully entrenched in the tech and startup scene ever since.

Steven has always been drawn to numbers as opposed to words. Meanwhile, his father and grandfather are both entrepreneurs, in the payments and insurance sectors respectively. Combine his love of finance with his entrepreneurial DNA, and we get an idea of what Steven could possibly be working on today.

Steven’s first startup: FantasyHub (sports betting)

Back in 2013, when Steven was graduating college, the Daily Fantasy Sports market was just getting off the ground. While apps like DraftKings, FanDuel, and so many others are very popular today, the space was much more nascent back then. This was the first time people could make money on fantasy football quickly rather than over the course of a whole season.

Fulfilling his destiny to become a third-generation entrepreneur, Steven and his friend Andrew Busa decided to throw their hat in the ring and jump on the opportunity. He recalls how the idea came together organically, “Back to my interest in numbers…gambling, betting…that kind of stuff is very numbers heavy and I was really drawn to that.”

Steven and Andrew each raised $25,000 from their parents for a total of $50,000 in angel funding to launch the business. The justification was that this money would have otherwise gone to pay for business school. Just maybe, starting a business could be more valuable than getting an MBA.

FantasyHub culminated into a three-year journey, which included future rounds of capital, life-long learnings, and an acceptance into the esteemed Techstars accelerator.

Building FantasyHub

FantasyHub was a mobile and web app. The platform was built very similar to DraftKings and FanDuel, however, with one key twist. FantasyHub allowed users to raise money through charity on the platform.

As first-time founders, they had to do a lot of unscalable things, like cold-calling different charities managed by professional athletes. Notably, they were able to get buy-in from the charities of NFL legends like Adrian Peterson, Kurt Warner, and Bo Jackson. “They ended up playing on FantasyHub, giving away signed memorabilia, meet and greets, and free tickets to games in exchange for donation-based fantasy games, and that actually was how we cracked the nut. That’s how we broke into the space…fantasy sports for charity.”

Quite the customer acquisition hack, professional athletes promoted FantasyHub on social media and fans flocked to the app for a chance to win exceptional prizes. Once users were on the app, they became hooked and bet on other games.

Steven’s first experience with Techstars in Austin, TX

In 2015, two years after its inception, FantasyHub joined one of the most selective startup accelerator programs in the world.

“It’s cliché to say but it’s true. That experience was totally life-changing for me.”

Steven doesn’t mince words when describing the impact that Techstars had on his development, “It’s such a high-quality network of serial entrepreneurs and experienced folks that know what they’re doing. I’m from Louisville, Kentucky…not a hub of entrepreneurship necessarily…It was huge for me as a young entrepreneur to just soak it up like a sponge.”

Steven continues to maintain close friendships from his experience in Austin. In fact, more than 8 years later, he still goes down to Austin once a year to visit his people. Why did Steven choose the Austin cohort? He applied to the New York, Boston, and Austin programs. The first two rejected him. They made it an easy decision!

Pro-tip for founders: any way you can get into Techstars, do it.

Moving on from FantasyHub

Coming out of Techstars with solid traction, FantasyHub raised a $1.1 million seed round. Amazing!

Only one small problem…that same summer, DraftKings raised $300 million from Fox Sports and other investors at a valuation of $1.2 billion. And FanDuel? They raised $275 million in a Series E funding round at a valuation of over $1 billion.

It didn’t end there, that same year several Attorney Generals wanted to regulate the space given it was looking a lot like gambling. Understandably, investors backed off from the space, and only the very well-funded DraftKings and FanDuel were able to weather the storm. The aftermath was all the other sites collapsed and one way or another rolled into DraftKings and FanDuel. FantasyHub specifically sold its user base to DraftKings.

By early 2016, the writing was on the wall. FantasyHub had the option to raise an additional $250,000 of capital but maturely chose to wind the company down instead of throwing good money after bad.

Being honest, Steven admitted he fell into a dark place. One of his investors even made his life a living hell and tried to sue the company for failing (huh?).

Pro-tip for founders: be careful of who you take money from / who you put on the cap table

The Beginning of A New Era

After taking a couple of months to reflect, Steven realized he was meant to be a career entrepreneur, but he also wasn’t ready to start another company right away. Instead, he went back to his numerical roots.

“I said, look, well, I love managing the financial model and the financial part of FantasyHub. Maybe I could do that for other companies. I could participate in the startup world, but I wouldn’t take on the stress of being a founder.”

From 2016 to 2020, Steven became a fractional Head of Finance for early-stage startups. It started with the relationships he cultivated within the Techstars network, building financial models for other portfolio companies, and he parlayed that into a more lucrative career. Eventually, this led to his current startup…

The Birth of Forecastr

After spending 6 months in the woods, hiking the Appalachian Trail from Georgia to Maine, Steven returned to Kentucky and joined a company called Venture First — a boutique financial services group focused on empowering entrepreneurs.

Fun fact: this was the first and only W-2 job of Steven’s career

While at the firm for two and a half years, he met Logan Burchett, who was Head of FP&A at the company. The two connected instantly and soon co-founded Forecastr. The idea was to become the Carta of financial models. A new operating system for building high-quality financial models online and outside of Excel.

Smartly, the two decided to de-risk the company by keeping their full-time jobs and moonlighting as founders. They were able to accomplish a ton of customer discovery and get the company through major checkpoints before even having to add their own personal burn. A much less stressful way to get a startup off the ground!

The best part was Venture First was totally supportive and even became a shareholder in the company.

Building Forecastr

1. Customer Discovery
2. Tech
3. Investors

These are the three components Steven says are needed to get a company off the ground. They focused heavily on Customer Discovery, speaking to hundreds of founders in order to seed the sales funnel.

Being non-technical founders, they went to a local firm that was interested in doing an equity deal to build an alpha prototype. Knowing that wouldn’t be scalable, they quickly went out and found premium technical talent. They were able to do so with the hirings of Jonathan Frazier and Steven Ambs, seamlessly filling their skill gap.

As for number 3, Steven and Logan spent two years cultivating a network of investors. In Q4 2019, they were ready to formally launch and kicked off with a pre-seed round of $750,000 — which included $100,000 from Techstars as Steven was accepted into the prestigious accelerator for a second time!

In January 2020, the fearsome four went full-time on Forecastr and jumped into Techstars.

Why do startups need financial modeling?

Steven explains that financial models are a wonderful framework to help founders meet their three greatest objectives: hitting growth targets, not running out of money, and raising capital.

Remember that investors are largely finance people who tend to be convinced by numerical narratives. The financial model should tell the same story that the pitch deck does.

If you build a great financial model for your company, it should help you raise capital, set and achieve your growth targets, and make sure that you don’t run out of cash because you are aware of your cash flow positions.

Steven recommends that founders should begin thinking about their financial model on day one. Of course, it should be very simple in the beginning given the amount of unknowns. As you grow, the forecast becomes more accurate.

Early on, you need an “MVP” financial model — that’s right, building a financial model is like building a product. The model describes the core concept of the business, and once it is pushed into the market you will adjust and pivot the model to reflect how the business is actually performing, making it more accurate. He calls it, “Model-Market Fit.”

Forecastr Raises a $4.5M Seed Round!

In August 2023, Forecastr announced the company raised $4.5 million from new and existing investors. Per KY Inno, the large portion of the round, $2.4 million, came from two sources: $1.4 million from Capital Midwest Fund, based in the Milwaukee, Wisconsin, area, and $1 million from FutureLabs Capital, a previous investor that has a managing partner and co-founder, Mack Shwab, based in Louisville.

Steven recounts how the round took seven months to get done. Back in Q2, Crunchbase published a great article on how seed startups are being impacted by the broader venture funding slowdown. It’s not easy raising money in this environment, but the best of the best like Forecastr are able to get it done. Steven calls it a hard-fought, nose-to-the-grindstone round.

“We started the year at $1.2M in annual recurring revenue (ARR). We’re at $2.2M now. We’re on track to more than double this year. So we’ve got pretty solid growth metrics, solid retention metrics, and solid unit economics. I fancy myself as someone who’s pretty good at fundraising. I’ve got a large network. I’m kind of a finance salesperson. I can talk the talk. But it still took me a full seven months. I pitched 200 investors to get three yeses.”

Of the $4.5M, $2M came from current investors and the other $2.5M came from new investors. Steven lives by a simple rule: informed investors are happy investors and happy investors write checks. “Take care of who’s already on the cap table. If you keep them informed, if you give them their due, they’ll come to bat for you in your hour of need, which is what happened with us.”

The two other big fundraising takeaways: 1) have a large top of funnel (with just a 1.5% conversion rate, Forecastr wouldn’t have been able to get the round done if they didn’t find 200 leads to pitch to) and 2) have an amazing co-founder (Logan ran the business while Steven went all-in on fundraising efforts).

The Future of Forecastr

Forecastr’s vision is to replace Excel and become the default operating system for financial planning and analysis (FP&A) in the private market. With such a lofty goal, we should expect to see significant product expansion around data integration, analytics, reporting, and collaboration.

Forecastr predicts to be at $6 million in ARR by the end of 2024. At that point, the company expects to have a headcount of 55 people. Steven told KY Inno that reaching somewhere in the $5 million mark should lead to profitability, which is another benchmark the company has for next year.

Steven is clearly thinking deeply about growth strategy, as he rattles off ideas around customer acquisition, channel partnerships, product-led growth, data sharing, and flywheels.

Forecastr’s number one company objective? Steven exclaims, “Live by our values.”

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This article was authored by Arteen Zahiri