5 LA tech founders reveal what it was like to get their startups funded

by John Siegel
November 22, 2016

Fundraising can be stressful for any startup. Between the time reaching out to and meeting with investors — while still worrying about the growth of the company — the uncertainty of it all can bring about a new level of pressure for startup founders. But in spite of all the work, there is sometimes a particularly bright light at the end of the tunnel when the money finally gets wired. These five founders discussed the funding process and offer advice for founders seeking their first round of funding.

 

Oded Vakrat isn't new to the fundraising game — he and his co-founders had previously gone through a round of funding with their previous startup, Silicon Valley-based Hashsnap — but Earny's seed round came with more than just cash: a partnership with Science Inc. and a one-way ticket to Los Angeles. 

How long was the process of pitching potential investors?

We closed our seed round of $1.2 million four months after the first investor meeting. Toward the end of the round, we decided to partner with Science Inc. and relocate the team from Silicon Valley to Silicon Beach.

How many potential investors did you speak with?

It was very important for us to make sure that the investors joining the team would be ones who we really want to run with in the next few years. Smart people who will be there for us in good situations and the harder situations as well. We came across a lot of investors who were not the best fit for the venture. I believe that we met with about 30 investors in total, in addition to our current investors.

How long did it take between the investors agreeing to invest and actually receiving the money?

Two weeks.

What was it like when you and your co-founders secured the funding?

We are three founders who have been working together for more than two years, and we had already raised funding with our previous company.

This time, right after we secured the funding we felt a few minutes of satisfaction and success. But after a few minutes, we felt the clock ticking and focused our mission on building the team and pushing the company forward, fast.

What did you feel personally?

Being a naval academy officer in the Israeli Navy for eight years, you face a lot of responsibility. Taking money from VCs is different than taking money from angel investors. The dynamic is different and the feeling of taking personal money from someone is different. Right after the seed investment, I felt both satisfied and super motivated to make my investors 10 times as much back.

What advice would you give to companies as they pitch investors? 

Believe in your path and listen to everyone around you, each one of the people around you will say at least one smart thing. Do your homework before every meeting, control your space let them trust in you.

 

For FloQast CEO Michael Whitmire, the fundraising process started as something informal. But as time went by, he and his team realized how much the money would help the business.

How long was the process of pitching potential investors?

I started testing the waters and having informal meetings about nine months prior to the funding in June 2015. I began formally “pitching” about four months prior to closing the round in October 2015. We started getting term sheets in December 2015, signed in mid-January and the wire hit the bank at the end of February 2016.

How many potential investors did you speak with?

The funnel was: 70 intros, 20 pitches, five finalists and three term sheets.

How long did it take between the investors agreeing to invest and actually receiving the money?

Five days from final partner pitch to term sheet and 35 days from term sheet to wire; we’re crazy organized accountants so due diligence flew by.

What was it like when you and your co-founders secured the funding?

My co-founders were fairly removed from the process; I really ran everything. They were really excited when we wrapped up the round because it really meant two things: we get to scale our business and we get paid again! We got incredibly close to running out of cash and the founders stopped taking salaries while I wrapped up the round.

What did you feel personally?

While you’re in the grind it’s terrible and you just want to wrap it up, so I personally felt more relief than excitement. Once the dust settled a little, I was able to step back and reflect on the round and got really excited. After all the work we ended up getting the partner and funds we wanted when we started the process.

What advice would you give to companies as they pitch investors?

I wish I had a different mindset heading into the fundraising process. My thinking was “man, I hope I can raise some money.” The reality is we have a great business, traction, domain expertise, amazing customers and a huge market opportunity. My mindset should have been, “Let’s go find the right partner and grow this thing!"

 

A round of fundraising probably can't get much smoother than the one overseen by PatientPop CEO Travis Schneider and the company's Series A investor, Toba Capital.

How long was the process of pitching potential investors?

We spent close to a year developing a relationship with the VC which eventually funded our $17.5 million Series A. We were introduced at a point in time when we were not looking for capital, so we had the luxury of getting to know them and keeping them up to date with our progress month-over-month.

When it came time to prepare to go out and do our Series A, they were ready to go and we closed a deal quickly with no drama or surprises.  

How many potential investors did you speak with?

We knew we had found a great partner in Toba Capital (our Series A investor) and both parties felt good about the terms of the deal, so it made sense to do the deal and get back to focusing on the business and not distract ourselves with a fundraising roadshow.  

How long did it take between the investors agreeing to invest and actually receiving the money?

Less than a month in our case. We negotiated the terms over dinner, shook hands by dessert and our lawyers then papered the deal and we closed within approximately 30 days. It helps to talk about all the terms upfront and have a reputable law firm prepare your documents, so both sides follow best practices.  

What was it like when you and your co-founders secured the funding?

It's a great feeling when the wire hits! Everyone feels a strong sense of validation and enthusiasm to get after it.  

What did you feel personally?

Scared sh*tless! Now the real work begins. Raising money is not the end game, it's really just the beginning. It's fuel, so you can enter the race.  

What advice would you give to companies as they pitch investors?

Raising money is a lot like dating. You need to go out and get to know investors before you try and get hitched. Spend time with investors, keep them updated on your progress and your challenges and really invest in building a relationship.    

 
 

When fitness startup Handstand announced its $1 million seed round in late October, it was revealed that the principal investor in the deal was none other Reebok, the apparel company. According to founder and CEO Tiffany Hakimianpour, some solid advice and a good degree of patience made the process go by swimmingly.

How long was the process of pitching potential investors?

The process of pitching investors for our seed round started with Reebok, who was our anchor, so it took longer as they’re different than the standard angel investor or VC. Overall, the process took approximately two months.

How many potential investors did you speak with?

I spoke with about 20 to 30 potential investors.

How long did it take between the investors agreeing to invest and actually receiving the money?

Once they agreed and committed, it took approximately two to three weeks to receive the funds.

What was it like when you and your co-founders secured the funding?

I don't have any co-founders, but the members of my technology team were ecstatic, as were my advisors and myself. All the sweat and hard work definitely all paid off.  

What did you feel personally?

I felt relieved that Handstand could now focus on hiring an incredible staff to help our company grow and expand. We were essentially bootstrapped before raising and I was pleased that we were persistent and ended up with such a great group of investors and advisors and Reebok!

What advice would you give to companies as they pitch investors? 

I would say having great mentors and advisors to help you along the way are very helpful when it comes to investors. Their advice was to be prepared for the meetings and they suggested what questions should be asked, but most of all they recommended staying focused on building the business while we were in fundraising mode. Be yourself! That's something I learned from trial and error. Nothing beats authenticity. 

 

MeUndies founder Jonathan Shokrian spent a great amount of time speaking with potential investors before he and his co-founders were able to whittle down their list to around 15. Looking back on his company's financing experience, he has some interesting advice for startups looking to close a round of financing.

How long was the process of pitching potential investors?

Early on it was simply contacting anyone I knew about investing in the company. After the website and product were built and we had our first visuals, it became much easier. The entire process took about nine months.

How many potential investors did you speak with?

I spoke to and met with more than 100 investors and we closed on roughly 15.

How long did it take between the investors agreeing to invest and actually receiving the money?

This took longer than expected. Some of the first people to commit took the longest to fund. We also didn’t create a good hard deadline, so it was more of a rolling close. It took about two months to collect, roughly.

What was it like when you and your co-founders secured the funding?

Hard question to answer, but looking back it felt like we had accomplished one of the many tasks that needed to be done to launch the company. 

What did you feel personally?

Excited and grateful for the opportunity to start my own thing. I was also super appreciative that I had friends who were willing to support what I was passionate about. 

What advice would you give to companies as they pitch investors?

I’d almost always advise to try and get the product up and running before raising, and to never feel defeated by people saying no. You have to keep knocking on the doors until someone opens. 

 

Some responses were edited for length and clarity. Images via participating companies and Facebook.

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