We had written code for 8 months in our home town of Missoula, Montana before it occurred to us we might need to raise money to launch our startup. There were a number of reasons for this: 1) We had no idea what we’d do with the money. 2) We assumed our apps’ success would be huge and immediate.
Obviously, this was naive.This naivete was complicated by the fact of our geographical remoteness from the centers of funding.
Michael A. FitzGerald is the co-founder and CEO of Submittable, a cloud-based submission platform used by thousands of publishers for accepting and curating digital content. He’s also the author of the novel Radiant Days that was listed by LA Weekly’s Favorite Books of the Year and nominated for Nerve’s Henry Miller Award. He lives in Missoula, MT with his wife and two young sons.
But, eventually, in our haphazard and awkward way, we did release a product, get some customers, including major universities and large corporate publishers, and raised a significant amount of capital. In hindsight, it was all somewhat miraculous.
(I want to point out that while raising money was an essential event for making our company the success it now is, I’m torn how I feel about this “accomplishment.” Getting investment is definitely the hot cousin of borrowing money. Being able to eat is great, but, as the CEO, one of the things I think about pretty much every day is that I owe our existing investors all that money back. This is not a great feeling.)
But we did eventually raise capital outside Silicon Valley. I went out to lunch one day with an astonishingly good developer and entrepreneur named Glenn Kreisel. I was looking for technical feedback on what we’d done so far, which was to create a social platform based around writers and publishers. We had a name, and a logo ripped off from a free logo site. But the site worked. Fake users could sign up and talk about fake publishers, submit files to the fake publishers and the fake publishers could curate the manuscripts and also interact with the fake writers and readers. I showed Glenn some basic use-cases and the main features. He was relatively complimentary, but mostly he seemed to be humoring me. Out on the sidewalk, as we were getting on our bikes, he said, “So you’re going to need some money.”
That seems like years ago. Over 2500 organizations have signed up to use our platform and thousands of people submit thousands of files via the system every day. Things have worked out both in raising capital and (thank God!) in revenue. But I definitely made a number of mistakes. When I do it again – and I think I’d do it outside NYC or Silicon Valley – these are some basic rules that I’d try to follow:
Write as much code as humanly possible before raising any capital. If you’re not a seasoned entrepreneur with a track record of success, don’t waste your time asking anyone for money. Get your hands dirty. Create a product. Get one customer.
- Work as if you’ll never have any investment.
- Get one person to pay you for the product. Write as much code as humanly possible before raising any capital. If you’re not a seasoned entrepreneur with a track record of success, don’t waste your time asking anyone for money. Get your hands dirty. Create a product. Get one customer.
- Target as narrowly as possible. Ultimately, you want to conquer the world, and that’s the story your investors will want to hear, but they will also want to see “traction” (i.e., revenue) before they write a check. Architect the application so that you can conquer the world, but start with a niche that you can easily and affordably target.
- Cold-call. Even if you have a great product, calling a stranger and asking them to pay you for something you’ve built is lonely and often humiliating, but… it costs very little and it’s the truest way to get feedback. It’s also the kind of personal investment in the company and product that will steel you against doubt and real competition down the road. If you’ve cold-called 100 people in a single day, you can do anything.
- Create relationships, not contracts. At the seed stage, your investors will be people who are more interested in you and your team than your product. So get out there. Make friends, show them who you are, and see who they are. The relationship will get messy and it’s better to let all the freak flags fly before money is involved. If you have any doubts about the people, as hard as it will be, do not let them invest in the company. Your company is a fragile ugly thing in the beginning. One bad seed can easily destroy it.
Montana photo by C.S. Barnhill