We Raised $50 million - some facts & some pain
This is our first institutional funding and values ShipHero at $225 million. The money came from one firm, Riverwood Capital.
I got no tips for y'all, but I'll share some facts and some pain.
Every offer we got was from a firm that contacted us first.
There were some bumps along the road. My worst VC call by far was a warm intro to A16Z, and the awkwardness was on me.
Almost everyone I spoke to prior had sought out ShipHero. When I got on the call with A16Z I expected they knew who we were and I jumped right in... and totally lost them. I think they were scrolling our website during the call to figure out what we do.
Second worst was Battery.
We had a whole bunch of calls over 2 weeks, then they said they wanted to make an offer.
The partner wanted to be on the call, but the only time he had available was after business hours on Friday night, a time I usually spend with my family.
I agreed to the Friday night call. I logged on along with our VP Finance. 2 people from Battery were on and we spent 5 minutes of awkward waiting on the Zoom for the partner that of course never joined, his (very nice) underling let us know they decided not to make the offer.
They had spoken to an expert who had negative things to say about ShipHero, 3 things specifically (and I could be confusing the list with another investor because 2 investors had overlapping feedback from I the assume the same expert) 1: Our tech was weak.
2: A certain top 5 customer was going to churn. I'll stop there. That was frustrating. The customer in question is a huge advocate & offered to do investor calls whenever I needed.
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[ 3.1 ms ] story [ 16.1 ms ] threadI was committed and now our investors had an excuse to walk away. It was an unideal position to work from as we closed the deal. I almost never hold a grudge, but man...
Enough dark stuff... I took none of the $50 million, so don't ask me for a loan.
A Riverwood Principal and a Co-Founding Partner came to where I live during the pandemic to meet. They were our first serious conversation & have lived up to their reputation as great investors.
The decision to go from being bootstrapped & profitable to taking a large investment was one I debated for a long time and got a lot of advice on. I think I made the right decision, but ask me in 5 years.
Bootstrapped -> funded comes with change & plenty of opportunities for mistakes. And boy have I've made mistakes, but I have a great team that carries me.
If you are a ShipHero customer, know that you're going to get a better product each day than you had the day before.
But the investor didn't ask, just made his decision.
3: Company X was going to beat us on price.
I mean it's true, they weren't going to beat us on price, they already do. I have nothing but respect for that company. ShipHero starts at $1,850 a month, X starts at $9 a month. You know how I learned those facts? By visiting each of our websites and clicking on the pricing link
Enough of me being salty, screw that guy.
It was overall a positive experience.
I got a ton of support from teammates and friends I made on Twitter and off.
The nicest VC that didn't offer to invest was probably Austin Levitt of Sequoia.
We did have 1 self inflicted issue.
We had multiple good offers, which put us in a great position.
I was up front with investors about all the negative things I could think of. No unexpected bad news was my approach.
Then, the week after we signed an LOI, the employee with the 4th most equity quit.
The way it works is: before you sign an LOI, if you have multiple offers, you are in a position of power.
Then that changes once you sign the LOI. When you sign an LOI, you have to tell everyone else sorry, I like someone else better. So now all your other options are gone.
Once I got the "Peace out, I quit" email, my first call was to the investors.
I was hitting them with unexpected bad news but at least I could be transparent. It wasn't pleasant but the investors still were solidly in.
A few days later that individual posted that they had left
The announcement was public and let's say exaggerated this person's role. This time the investors called me.
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