2010-06-07

Fundraising

I've been meaning to write this blog entry since the end of March, when Smart Office Energy Solutions closed our seed fundraising round. However, due to the intricacies of international wire transfers, it wasn't until the end of May that we fully received all of the funds that had been committed. Now, with that checked off, I'll share a bit of what I've learned about fundraising.

As most know, this was my first time leading a fundraising round. My first two startups were bootstrapped and, while my most recent startup did raise significant capital, there was another officer who led that process. Accordingly, I didn't know quite what to expect back in January when we announced our intentions to raise $100k by the end of March.

At first I didn't proactively market our offering, relying instead on those who heard about it via my tweeting, blogging, and status updates to approach me. By the end of January we had closed $20k but would clearly need to step it up to meet our goals.

In February I posted the opportunity to participate in my LinkedIn groups, which generated significant response. After several follow-up meetings we closed an additional $35k by the end of the month--over halfway there!

Come March it was time to be aggressive ("Be aggressive, be-be aggressive," as our HS cheerleaders would say.) so I began to target proactively specific individuals who would be good candidates. This generated great interest but only immediately yielded a few small investments. Coming into the last week of March we were still $35k short of our goal and I didn't really know how exactly we were going to bridge that gap.

I published a notice that we would close the round as planned March 31st and an amazing thing happened: all of the interested parties started lining up with commitments! In fact, by the end of March we had offers to purchase twice the number of shares we were offering! Maybe I should have announced the closure of our round back in January . . .

This response was thrilling! Because there were good uses to which we could apply additional capital, we decided to seize the opportunity but we ultimately capped the round at $150k. This had a nominal dilution impact and significantly strengthened our position.

I am very personally gratified that each of our investors chose to take a risk and invest in our venture. I know that, in many cases, this represents as much a bet on me as it does a bet on our business model. As such, I am working tirelessly to ensure that their investment grows in value and that this company realizes its massive potential.

The diversity of our shareholder group is interesting. Outside of the two founders, our shareholders include 6 alumni from Rice University, 2 family members of those alumni, 3 alumni from IMD Business School, 2 IMD professors, 1 alumnus from the Thomas Jefferson High School for Science and Technology, and 1 former colleague. The group includes residents of Texas, Rhode Island, Virginia, Argentina, Costa Rica, and Switzerland. I know every one of the investors personally and am proud to count them all among our extended team.

Closure of this investment round represented a very significant milestone for this company. It moved us past the point of no return. This is no longer just about an individual dream to make the world smarter and better; it now bears the support (and risk!) of several other stakeholders as well. We're in it together and I know we will realize our goals!

1 comment:

Danny Joe said...

Congratulations.

Remember what Tom Perkins said:

"The time to eat the appetizers is when they are being passed around"