What was your overarching approach/strategy to the first round?
My co-founder, John Cohoon, and I approach everything we do as an opportunity to learn, improve and have fun. It shapes our decisions. And we believe success follows from it. So we approached our seed round from the same perspective.
I think this perspective mostly impacted the types of investors we sought out. And, ultimately, the types of investors who participated in our seed round. All of our investors bring serious intellectual capital to the table, really understand our business and are great people to be around.
What did you learn about yourself and the process of getting to where you are today?
The bigger story here isn’t what I learned about myself. It’s what I learned about my co-founder and our symbiotic partnership. John and I worked together for years at other companies before starting Elevate. He’s an amazing developer and probably the best problem solver I know. But it wasn’t until we set out to raise funds that I came to appreciate his optimism too.
Raising funds is a roller coaster ride when you’re the CEO. Fun and exciting one day. Excruciating the next. It’s not easy. So having a co-founder there to help pick you up along the way is critical. It’s energizing. And it has made us even stronger.
The other bigger story here is about our thriving startup community. John and I didn’t get involved until recently—mainly because we never took notice while we were so focused on building our product.
It’s funny, because we’ve known Chad Halvorson from ThisClicks for a number of years. But we really thought he operated in a vacuum. So I was amazed when he opened my eyes to everything that’s happening in the Twin Cities. There are so many awesome startup events. So many super successful entrepreneurs. So much information being shared. It’s inspiring and it speeds everyone’s learning curve.
Any tips for traction?
Just get something to market as soon as possible. For us, that meant building only the parts of our product that were necessary to put a first customer on it. So we actually skipped the whole self-service part of our product and decided to just manually on board new customers for free. That got us to market at least six months faster.
Once we got to market, we chose to focus initially on small, local restaurant operators because we felt our story would appeal to them. We offered to let them try Elevate free for 90 days. The only obligation was to provide candid, ongoing feedback. In a matter of weeks we signed up our first customer.
Now, this all sounds easy. So I want to point out that we didn’t figure this out overnight. Or all on our own. A lot of the credit actually goes to Marc Usem, who recently participated in our seed round. John and I first met Marc well over a year ago. He helped us refocus on validating the product versus just developing the product.
What advice do you have for peer entrepreneurs who are starting/bootstrapping and seeking funding?
Start preparing to raise capital very early in the process of creating your company–even if you don’t plan to take outside investment. We didn’t prepare at all because we didn’t think we’d raise capital. So we had to scramble a bit when we decided it was the best way for us to scale quickly. I spent days reading every article I could find on fundraising and venture capital. Fortunately, we knew Chad (Halvorson) and he introduced us to a couple awesome investors. If we could do it again, John and I would have started networking with other founders and investors right from the start—building a network of strong relationships to lean on when the time came.
But it all comes back to validation. Get your product to market. Get at least one paying customer. Then you can start having meaningful conversations with investors.
Anything else you would like to add?
Where to even start? I have a whole notebook of thoughts on the fundraising process. I documented the whole thing because I realized early on that this was going to be an amazing journey—and that we would learn so much. And we did! Someday it will be an eBook or something.
Here are a few nuggets:
• You will only occasionally use your pitch deck, but spend the time to get it perfect. It helped us tell our story and nail down our unique selling proposition.
• Every “no” gets you closer to your next “yes”. Anyone who’s had success in sales knows this very well. It’s a numbers game. Keep pitching.
• Get something out of every interaction. When an investor says “no” then start the process of how else they might be able to help you.
• At some point you will be halfway done with 80% to go. Thanks to Ryan Broshar at Confluence Capital for giving us a heads up on this one. So true. It will take much longer than you think to close out your round. Even if you come out of the gate strong.
• It’s not over until the money is in the bank. We kept pitching investors right up until the day before our close. Plan for the unexpected.