GigaOm just posted about the $350,000 angel round we just raised. Here’s the inside story how we raised the money.
Back in January, we raised about $150,000 from friends & family - my mentor from DreamIt Ventures, my old Amazon VP, my parents, a friend from college, Jeremy Arnon (a bizdev guy I met at NYTM) and his twin brother, and a Wall St. banker who is the best friend of Josh (my new business development guy). We considered doing convertible debt, but ended up pricing the round. (Happy to explain that in a future post if anyone is interested).
Our excellent lawyer (Jay Rand, Manatt) put a clause in the term sheet that gave us 60 days after the close to fill out the round, which officially closed February 4th. Smart move, considering we just filled up the round today, 57 days later.
AngelList is a collection of amazing angel investors, all waiting for your brilliant idea. You fill out an application and, if you’re awesome enough, your application will be sent out to everyone on the list. You’ll then be introduced personally over email to anyone who is interested.
As reported by Venturehacks, we sent out our application once, touting our idea of “social media management for businesses”, got 8 fantastic introductions, and were ultimately funded by David Rose and Chris Yeh. The Venturehacks guys came back to us and said, “We want to send your application back out onto AngelList with the added social proof of being invested.”
To give you some context, over the last 3 months, we followed the Customer Development methodology and went outside of the building. And we found that the social media management tools space was commoditizing quickly, with everyone concentrating on selling to a small sliver at the top (media companies, PR, agency, etc). We also met with VCs, who gave us the same feedback. So it was time to pivot.
So we pivoted (explained in the GigaOm post, but I’ll say more soon), and sent the new direction to AngelList. And this is where the craziness started.
My first phone call was with Tom McInerney, 3 hours before I was flying out to SXSW. After about a 30 minute phone call, Tom was in. He then introduced me to his friend Paige Craig, who would also be at SXSW. I met Paige in Austin, and after meeting, he told me he was in. The next day, at a Venturehacks meetup at the Four Seasons hotel, he pulled over Dave McClure. We went out to the balcony (he wanted a cigarette) and I pitched him. He was in. The following day, I spoke with Thomas Korte, who moved up our scheduled phone call a couple days once he heard Dave was investing, and he was in. I also got an email introduction via my friend Russ (founder of SeatGeek) about his investor Kal Vepuri, who was also at SXSW. Kal and I spoke on the balcony of the Austin Convention Center, and I was blown away by his intelligence and humility. So Kal was in. Finally, my friend Michael Galpert of Aviary connected me with Gary Vaynerchuk, who is a perfect investor for us given what he is passionate about (social media for businesses). David Cohen finished off our round not too long after that.
So that’s it. Through a combination of a great team (Chris & Haim founded Etsy), customer development, responding to feedback, AngelList, networking, and being able to articulate a compelling vision backed by domain expertise, I was able to raise $200k in the 6 days of SXSW!
If you have any questions, leave a comment or email me at email@example.com. Thanks!