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[Exclusive Insights] How Do You Find Startup Capital? Learn From Millions-Worth .ME Startups


By Goran Bogunovic, June 29, 2017

Pulling your rich uncle by the sleeve, snooping around loan programs, exploring grant possibilities, launching a crowdfunding campaign… There are dozens of ways to find initial capital for your startup.

Let’s not forget the great option of joining a startup accelerator, or pitching your company to investors. Of course, you can also reach to your own pocket and turn to bootstrapping, as some of the world-renown companies did when they were making their first business steps: does Airbnb or MailChimp ring a bell?

Now, this all sounds peachy, but how exactly does one get from A to B and get the needed funds? And what makes one idea attractive to investors?

We’ve already discussed what makes a perfect startup pitch, but now we want to introduce you to millions-worth .ME startups and their funding stories, so you can pick up a thing or two from their real experiences. All of these stories include a mixture of the following three things: a recognized idea that solves a certain problem, good timing, and a dash of luck. Also, relevant experts and VCs have kindly shared their insights so to make your entrepreneurial venture easier.

Startup raising money

Emerge.me: $1.8 Million Raised

Health insurance sure sounds complicated and many are still perplexed with what their health coverage actually is, especially if we take in mind the U.S. and the uncertainty regarding the consequences of proposed changes within the Affordable Care Act.


Wes Thompson The roots of Emerge were really in a one-page hypothesis about building an ‘insure-tech’ platform focused of the area of emergency insurance. I pulled together a group of people – trusted advisors – that I knew were really good thinkers and would challenge my hypothesis, would tell me if I was crazy. They got even more excited than I was.Wes Thompson, founder and CEO of Emerge.me

Emerge.me is a startup which stepped forward, making emergency insurance accessible, understandable, and easy to purchase. Their goal is to protect people from the growing risk of medical debt. They’ve created a virtual advisor called Max that helps users find, compare, and buy emergency insurance online. Emerge.me isn’t affiliated with any particular insurance company, which is why you can expect unbiased advice, crafted according to your needs and budget.

We asked Marc Howard, Marketing and Growth Expert from emerge.me, to share some tips and tricks for startuppers who are searching for funds and explain how did the company managed to raise $1.8 million in 2016. Here’s what Marc said:

Raising capital can be one of the most daunting, tiresome yet rewarding experiences that a startup can have. Emerge.me was fortunate to have a founder with a track record of success at running an insurance company before. Even some of the best ideas fail to raise capital if the team does not have a track record of previous success. If you do not have team with a strong background the next best thing is to not only have a useful product but an execution and growth strategy that can clearly show investors the product and market opportunity and how you are prepared to deliver on that strategy.

We also leveraged a company cobuilder called Rokk3r Labs in Miami, FL to assist with product ideation, market evaluation and product development. We were able to take advantage of the expertise and network of peers that Rokk3r introduced us to. Once a startup launches, exposure becomes a top priority which is why we signed-up for pretty much all the major startup pitch competitions that we could find. This strategy provided some great PR exposure including winning 2nd place in the TechCrunch Miami Pitch Off competition. Lastly I would also recommend thoroughly completing a profile on investor/startup connector sites such as Angellist and Gust.

Here are the three key takeaways from Emerge.me and their experience with gathering funds:

  • You cannot completely eliminate luck of the equation when it comes to raising initial capital
  • Great team capable of executing, as well as great partnerships are crucial for early traction
  • Exposure matters and will move your company forward. This includes networking, signing up for startup pitch competitions, and completing company profiles on relevant investor/startup connector sites

Emerge.me

Raise.me: $16.5 Million Raised

The problem of student debt is a serious and tangible issue, especially in the U.S. According to the White House report from 2015, the government announced a support of almost $50 billion from the Pell Grant and the American Opportunity Tax Credit combined. However, low-income students who need this financial aid the most usually don’t even try applying for grants and scholarships as they know attending prestige colleges is expensive by itself.


Preston SilvermanCollege degree earners are two times as likely not to be unemployed… And as the economy is getting more and more sophisticated, we believe that students and families need more education, not less… There’s a really important place for it in society today.Preston Silverman, co-founder and CEO of Raise.me

This is where raise.me offered a solution in form of “micro-scholarships”. Students from 9th grade up can cash in their hard work and raise money for their desired future college. The average amount of money students earn via raise.me is $22.500, while there are more than 225 registered partner institutions. Students can apply free of charge, while universities and colleges pay an obligatory annual fee.

Raise.me managed to get total equity funding in the amount of $16.5 million, of which the $12 million came from their most recent Series A funding round in March this year. We’re talking about a group of venture capitalist firms – GSV Acceleration and previous investors Owl Ventures, First Round Capital and SJF Ventures, lead by Redpoint.

Redpoint announced the investment in Raise.me on their official blog, underlying the importance of this startup’s mission:

As a marketplace for students and colleges, Raise.me uses technology to create a more transparent and empowering system that’s a win for all parties. Students and parents get transparency into financial aid prior to application, high school educators have a new tool to help shape students for success, and colleges get to build relationships with students earlier and better match financial aid to the right students […] We are excited to partner with Preston, George, Dave and the rest of the Raise.me team to ultimately transform how the future generation prepares, chooses and pays for the best possible college education. Can’t think of a more worthy goal than that.

Cutting to the chase, here’s what you can learn from Raise.me:

  • If you manage to find a sustainable solution to the burning issue society is facing, investors are likely to support you because of the importance of your cause
  • Always strive towards creating a win-win situation for all the participating parties
  • Aim big and work on building partnerships with institutions, companies, organizations, or individuals that are likeminded and also share the meaning you want to create

raise.me

Fits.me: $16.22 Million Raised

We’re all familiar with the annoyance of purchasing wardrobe online, as expectations rarely meet the reality. Sometimes it’s the misadvertised quality of the fabric that unpleasantly suprises us, but most frequently – it’s our poor judgement of the size we need as the proportions are not as we assumed and the dress/t-shirt/blazer/other piece of clothes simply doesn’t fit us. If only there was a more accurate way to determine your size other than standardized online sharts…

Oh wait, there is.

Fits.me celebrates the beauty of different body shapes, with strong belief every single one of them deserves a perfect fit. The team has developed Fit Origin via which online shoppers can assess the best size for themselves. All they have to do is provide info about their height, age, weight, and select one of the body shapes that resembles their the most.


Heikki Haldre
Now when we are resolving the biggest problem for the clothing ecommerce, the data that we’re collecting helps the clothing manufacturers, clothing brands start producing clothing that fits more people not just in online channels, but also in brick and mortar sales. So Fits.me has quite an impact.Heikki Haldre, co-founder of Fits.me

Within a time period of only four years (2010-2014), Fits.me managed to raise $16.22 Million through four funding rounds. The Series A round happened in April 2013, where the company managed to raise $7.2 million from four investors: Conor Venture Partners, Entrepreneurs Fund, Fostergate Holdings, and SmartCap AS.

Here’s how Manu Makela, founding partner from the Conor Venture Partners, commented the investment:

Fits.me has a sophisticated solution that works, delivers provable results, is easy for retailers to deploy and has been signed up by a growing band of respected retailers and brands, on an international basis. From an investor’s point of view, there is tremendous growth potential.

Although there are some solid competitors (e.g. Virtusize and True Fit), Fits.me is still alive and kicking, and it was acquired by Rakuten in July 2015. Here’s what you can pick up from their entrepreneurial journey:

  • In order to get funded, think about how your solution can work for different parties as this multi-potential means more profit (and meaning) in the long run. Fits.me helps three specific groups: shoppers, e-commerce, and fashion designers. Shoppers can find a perfect fit and become more satisfied with the experience of online shopping, e-commerce brands can expect increased sales and reduced returns, while designers get a chance to listen to customer needs and get a fuller understanding of what type of garment they are looking for, and adjust the future process of developing fashion lines.
  • Once you put your finger on a certain issue, try contemplating how technology can help you bridge the gap between the problem and the solution.
  • Don’t be afraid of the competition: observe what they do, learn from them, discover what you can do better, and show investors what makes you unique.

fits.me

Everypost.me: $1.18 Million Raised

Looking for a perfect social media management tool that will help you control your social pages?

Everypost.me is pushing competition aside by simplifying social media publishing, saving users tons of time and energy. The tool helps you curate content from variety of sources and schedule posts and customize them. This means maximizing ROI, increasing traffic, and amplifying the effectiveness of each post. Since the launch, the startup has recorded average user growth of 10% per week.


Mark KingdonEverypost’s mobile-first business approach was a smart move, allowing them to offer a tool that competitors just aren’t ready to compete with.Mark Kingdon, founder of Quixotic Ventures

The most recent breakthrough for the company happened back in 2014, when it managed to raise a total of $800k in seed funding round. Add that to the previous seed round (in 2012) when it raised $75k, and one angel investment (in 2013) of $250k, and then start a slow clap for Everypost.me as they managed to raise a total of $1.18 million in just two years.

The most intriguing thing in this funding story lies in the identity of investors. They are all thought leaders from the social marketing world – Alexandre Hohagen (at the time of investment – VP of Facebook for Latin America and as of 2016, CEO of Nobox), Stefano Zunino (Head of Digital Worldwide for JWT), and Carlos Garcia (currently CEO of HYP3R).

Wondering what makes investors say “shut up and take my money”? Here’s what Mark Kingdon, founder of Quixotic Ventures and investor in huge companies such as Twitter, Refinery29, and Everypost.me, has said to Tech Cocktail:

I look for “WOW!” – something I feel in my gut. More practically speaking, I look for deeply passionate founders, a highly capable team, and a big and compelling space. Founding teams absolutely must have UX and technical chops. I used to run a big digital agency (Organic, Inc.) that Forrester rated a leader in user-centered design and I’m very picky about UX. UX is THE key driver of adoption in breakout consumer-focused startups – look at Uber, Square, Fab.com.

Lesson time! Here’s what we’ve picked up from Everypost.me and the way they’ve raised the needed funds for further product development and expansion:

  • Just because there are already existing companies with basically the same idea as yours doesn’t mean you should give up before you start. Having competition can actually be good for you, as investors can see what you can do better
  • Focus on UX: it is the key ingredient for making your solution a preferable one
  • Use relevant and measurable data to show your product works (e.g. Everypost.me has recorded user growth of 10% per week)
  • Mingle with people from the industry in order to show them how your tool/product/service can make their (and everyone else’s) lives easier

Everypost.me

Fundraising Tips From Tony Conrad, CEO at About.me

Have you heard of about.me? It provides users an opportunity to create a page about themselves and take control of their online presence. Thousands of entrepreneurs, freelancers, and creative individuals have designed their online portfolio via this simple solution.

We’ve contacted Tony Conrad, founder and CEO of About.me and a partner at True Ventures, to share his fundraising tips with us.

Tony was kind to direct us to a comprehensive blog post from 2015, in which he covered the topic in detail. Here’s what caught our eye, regarding the reason investors choose to invest:

Are you building a company or founding a movement? Why are you doing this? We want to understand what is driving a Founder. We want to dig into the emotional need of a Founder(s) to see their idea come to life – it’s essential to determine if they have the motivation to build a great company, and more importantly, do they have the magic to spark a movement.

[…] We’ve learned that the most inspiring founders do more than just create companies, they envision a way of life, a vision of how the world will be in spite of how people do things now (remember when carried physical maps not so long ago…) and it’s having a sense in their mind, knowing how people are going to use their product to impact their life is what makes it visionary. We want to support those type of Founders in a way that empowers them to go for it.

You heard the man: don’t forget to show the reason behind your startup mission. Let investors see your passion, make them feel the importance of your vision and how it can affect their lives, too.

about.me

Searching for Funds? Here’s Where to Start

If you’re not completely sure where to start building a profile for your company, we have prepared a list of useful sites you can check out:

  • 11.me: the biggest startup accelerator in South-Eastern Europe
  • Angel.me, Kickstarter.com, Indiegogo.com, Crowdcube.com: crowdfunding platforms for creative individuals, teams, and entrepreneurs
  • Angel.co: one of the best places to build a portfolio for your startup
  • 500.co: 500 startups is an early-stage venture fund and seed accelerator
  • Ycombinator.com: provides seed funding for early-stage startups
  • Codeinvesting.com: a place that connects entrepreneurs and investors
  • Gust.com: a global SaaS funding platform for the sourcing and management of early-stage investments
  • Seedcamp.com: the first round fund

Being present on events such as meetups and conferences is also important – you never know where the next opportunity may be! Take spark.me as a great example: it’s an exciting event connecting business, technology, and innovation leaders, startups and marketers.

For the end, soak in the wisdom from Carlos Eduardo Espinal who stands behind thedrawingboard.me website, an extremely useful resource for all entrepreneurs. Carlos wrote a very comprehensive “Fundraising Field Guide” and we think he hit a bullseye with this explanation of a mindset needed for a successful fundraising:

Fundraising can easily become a cycle that companies start and never really get out of until they choose to stop (typically at an exit). So it helps to just put yourself into the frame of mind that you are always fundraising; even right after a closing round, you should know who you will need to make relationships with for the next round.

(If you like the book, you can show appreciation for Carlos’ hard work with a donation).

Now, do you feel more ready to get that cash? Follow the path of successful startups that are turning into giant companies and changing the world. Build your website and choose a personalized .ME domain to make your business stand out!

 


Author:

Goran Bogunovic

Now, you're probably wondering how I got here! Running a marketing agency, educating people about branding, and helping you to develop your own presence online. To understand, you’ll need to follow me @Domain.Me

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