It was August 2019, problematic fundraising process was not running smoothly.
My co-founder and I had left a product management jobs near the New Relic several months earlier, previous, deciding to finally jump into building Reclaim after nearly a year lately nights and weekends invested prototyping and iterating of ideas. We had bits and pieces with the product, but the majority of definitely what we might call “slideware. ”
When you can’t raise big on the visual, you need to raise big on your proof. And the proof arises from building, learning, iterating and having traction with your first few hundred or so users.
When we spoke to a lot other founders, they all showed us the same thing: Go and the, raise big, and lift now. So we did that, however the we were puzzled as to why any would give us money with the help of little more than a slide ground to our names. We you spend nearly three months pitching hundreds of VCs, hoping to raise $3 million to $4 million dollars in a seed round to engage our founding team and produce the product out.
Initially, we were excited. There was lots of inbound interest, and now we were starting to hear many crazy numbers getting hosted around by a lot of Dominant People. We thought being aware of we were maybe a week clear of term sheets. We celebrated preemptively . How could it you should be this easy?
Then in July, mostly in an instant, everything started to dry up. The verbal offers to get term sheets didn’t manifest into real offers. We had term sheets, but they enjoying from investors that didn’t seem to care much on what we were building or how problems we wanted to solve. Most quickly realized that we hadn’t really built momentum within product or the vision , but happened to be instead caught up in what our company later learned to be “deal flow. ”
Basically, investors were active because numerous other investors would be interested. And once enough of these two weren’t, nobody was.
Fortunately, as I generate this today, Reclaim carries raised a total of $6. 3 million on superb terms across a group of incredible business and partners . However wasn’t easy, and it necessary us to embrace associated with failure and learn three central lessons that I believe each single founder should consider before they can decide to go out and message investors.
Lesson 1: Build big prior to when you raise big
In 2019, we were trying to find what some referred to as a good solid “ mango seed ” — that is, a seed on that was large enough that it was perceptibly closer to a light Series The particular financing. Being pre-product then, we had to lean on regarding our experience and our line of sight to drive conviction and desperation among investors. Unfortunately, it really wasn’t enough. Investors really have to felt that our experience was obviously a bad fit for the breathing space we were entering (productivity/scheduling) nor that our vision wasn’t soul searching enough to merit financial commitment on the terms we yearned-for.
When we feel get offers, they involved with swallowing some pretty sour pills: We would be forced to remove bad terms that were incredibly costly dilutive (at least from your perspective), work with an investor that we didn’t think use to have high conviction in our product or services strategy, or relinquish handancel in the company from an terribly early stage. None of all of their seemed like good options.