Road To Funding

Photo Credit: Jaisen Mathai

Road To Funding

This post is part of a series chronicling my 3 year startup journey. Each post can be read individually but to get the full picture I suggest starting from the beginning.

Runway is what start-up founders call the amount of time until there’s no money left to feed their kids. Prior to funding, a start-up’s runway is a function of each founder’s ability to survive without collecting a paycheck. Since Rachel was staying at home with Tavin (and later our daughter Elodie) it meant our runway was whatever money we had available in the bank and brokerage accounts.

Kickstarting OpenPhoto

It was 2011 and Kickstarter was only 2 years old. The largest campaign hadn’t yet broke the $1M funding level. It was also a time when Kickstarter had to approve which projects could launch a crowdfunding campaign on their site. Fortunately they picked an idea I submitted.

I launched my Kickstarter campaign for OpenPhoto on July 1st of 2011. It was an intense 30 days during which I received press coverage from Techcrunch , ReadWrite and others. By the end of the campaign I crossed my funding goal by raising $25,242 of my $25,000 goal. The successful funding from Kickstarter helped validate not only that people were interested in OpenPhoto but that they were willing to pay for it.

The Kickstarter funding wasn’t a proper angel or seed round but I knew it would help. In fact, the exposure from Kickstarter helped get us accepted by Mozilla into their WebFWD accelerator . WebFWD didn’t include any funding but legitimized us a little bit more and we got access to some great mentors and investors.

It was time to turn that into a successful angel round.

When our start-up met reality

Determined to close a round of funding by the end of 2012 I warmed up leads and had a spreadsheet of a couple dozen angel investors I knew by 1 or 2 degrees of separation. I probably still have that spreadsheet laying around; it’d be fun to dig up.

It would be 9 months longer than the 6 months I told Rachel before we’d get funding. That’s 15 months of not getting a paycheck. Founders tend to underestimate the time required to raise funding. Knowing that, I felt 6 months was both aggressive and realistic.

Let me fill in what happened during those those 15 months.

The first wave

Between October and March we talked with numerous angel investors while also pitching Kapoor Ventures and Khosla Ventures amoung others. I knew the pitches weren’t going well. If an investor is interested, you’ll know. I knew anything else meant there wasn’t chemistry.

“I have reviewed the idea and the material with [partner] and our team, and we’ve decided it’s not a fit for [firm].” – one of the VC firms we pitched

When fundraising it’s vital not to take rejection personally or as a sign you won’t get funding elsewhere. This is one of the most difficult parts of fundraising. I had prepared for maximum rejection and it was paying off; the rejection didn’t phase me.

2012 came to an end and I was faced with a decision and an unfulfilled promise I made to Rachel. I experienced something at that time which would be a recurring theme over the next 3 years; Rachel’s unflinching support.

In February of 2012 we were invited to interview for the IO Ventures accelerator. Over 650 companies apply and they pick a few dozen to interview. I was optimistic about our chances but in March we got the email that we didn’t make it in.

Unfortunately I have to inform you that your company wasn’t chosen to participate in the spring i/o startup program. You were one of over 650+ companies to apply and made it to the last round in our process.

The thing about start-ups is you can only dwell on failure long enough to learn something and then you move on. There’s always too much to do in too little time. We continued looking at funding opportunities which led us to the Knight News Challenge.

I was introduced to someone at the Knight Foundation by the person we pitched to at Kapoor Ventures. I was too naive at the time to know better than to ask an investor who didn’t invest for an introduction to someone else. Nonetheless we wound up not receiving any funding from the Knight Foundation. As with previous dissapointments we didn’t let this stop us.

A most memorable pitch

Oh, this is good. My most memorable pitch by far was to the Band of Angels. We were one of 3 companies selected to pitch to a group of angel investors. Keep in mind that I’d been practicing this pitch for months. It had evolved but I knew the pitch like the back of my hand.

I arrived to pitch and was asked to wait in the lobby because a few of the angel investors were running late. My point of contact, Nicola, kindly showed me to the room in which I’d be pitching. I was expecting the room to be empty and for the investors to arrive shortly after me. Turns out all the investors were packed into this room and I was sat down in a chair. The formalities were skipped and before I knew it I was fielding questions about how our Dropbox integration worked and what our projected revenue was. I knew all of this but the shock precluded me from articulating it.

The entire thing was a blur. Once in the parking lot I called Rachel who was waiting to hear how it went. I was devastated. The next 20 minutes was spent in my car with me wondering what the hell just happened. You just don’t get many opportunities like this and I absolutely blew it.

Unsurprisingly, I received an email from Nicola in March letting me know we weren’t selected to pitch to an even larger group of investors.

We know that this process can be somewhat intimidating.

No shit.

Reflecting on failed funding attempts

By now we had spent more than 6 months trying to raise funding. It was starting to seem hopeless. Fundraising is a complicated beast. There are a few ways you can almost certainly secure funding. Traction and a prior exit; preferably the former. We didn’t have either.

This was a tough time as Patrick and I both faced the possibility of shutting OpenPhoto down. We took a long stroll down Castro street in Downtown Mountain View. We reflected on all the amazing accomplishments we made that year. No matter how well the community was going or how much a small group of afficiandos loved what we were building we simply couldn’t continue doing it without raising funding. That was the nature of our business and we were faced with it’s frailty.

We never decide anything that day.

The Shuttleworth Foundation

At any given point we were in discussions with or waiting to hear back from several potential investors. In February I had come across a foundation I’d never heard of before, the Shuttleworth Foundation .

The Shuttleworth Foundation invests in people working in the areas of open data, open science, open government and other open things. It was a long shot but that hadn’t stopped me in the past so I did the work to find out more about the foundation and figured out who I might know working there.

A friend of an acquaintence, Philipp Schmidt , had previously received a grant from the Shuttleworth Foundation. I talked with him and told him about OpenPhoto. He thought it was a good fit and introduced me to Karien Bezuidenhout , COO at the Shuttleworth Foundation.

I’d go on to receive a fellowship grant from the Shuttleworth Foundation. It wasn’t until later that I realized how fundamental the foundation’s fellowship model would be to the ultimate success of OpenPhoto.

It took roughly 14 months after quitting my job to get funding. That’s more than twice my promise of 6 months to Rachel; only days before our credit card bill was due that we couldn’t pay off.

The waiting was difficult but finding a partner in the Shuttleworth Foundation made the waiting worthwhile.

Shuttleworth Gathering at the MIT Media Lab. Credit: Jaisen Mathai CC BY.

Had Patrick and I been on the same continent we would have popped open a bottle of champagne.