Fundraising

The highs and lows of startup life

I was recently back in the UK for two weeks and had the chance to speak at an event in London about the incredible journey with my startup in the last two years.

When I speak, I try my best to share useful information and this generally consists of mistakes I’ve made along the way and some of the greatest lessons I’ve come away with from the experience. At the same time, I also aim for my talks to be a little inspirational too, by sharing how I’ve been lucky enough to achieve some astonishing milestones despite the fact that I’m certainly no smarter than anyone else.

At the end of this particular talk, someone asked me a really fantastic question, which was “you’ve shared great lessons, tips and some amazing achievements, but what has been the lowest point in this journey so far?”. It is a great question and there’s certainly one moment that stands out amongst others as one of the hardest times I’ve had with Buffer.

A choice to raise funding

When Leo and I jumped on a plane to San Francisco around one and a half years ago, what we didn’t realise at the time is that in hindsight this was a clear turning point for us personally, and for Buffer as a startup.

When we first arrived, we quickly set up a number of different meetings. Notable people we met were Hiten Shah and Daniel Brusilovsky amongst a number of other founders at different stages of their startup career, including a few YCombinator founders.

What we quickly realised through conversations with people was that we could keep growing slowly and solidly without funding, but we were at a point with good traction and a clear bottleneck in terms of me being the only person working on the whole product and all technical aspects, where if we had some funding we could grow the team more quickly and get much faster growth.

Leo and I always have a very positive outlook which helps us a lot, so we quickly decided it made sense to raise investment and whilst we had no idea how to do that, we agreed that it was simply another thing we would figure out.

Switching our focus to fundraising

Of course, since we had literally no idea how raising funding worked, we asked many many people for advice, and we started to take action right away to attempt to make progress. One thing we were sure of was that we should try our best to reach out to investors and have meetings. We were scared to talk to investors since we didn’t know how to pitch or how the process works, but we knew that was exactly what we needed to do.

Due to our lack of experience and knowledge, we worked jointly on fundraising. We sat down together in various coffee shops and sent out dozens of emails to investors, to other founders and to people who had become casual advisors. We learned many things, including that you should always get an introduction to an investor, and that you should be very specific with a call to action in emails.

One of the important things we discovered, was that there should always be a clear focus of any pitch. Most pitches have similar content sections such as the market, a problem, your solution, current traction and the team. However, each individual startup will have a single aspect which is the strongest part of the pitch. For us, this was definitely our traction; Buffer already had 25,000 users, monthly revenues around $1,500 and we were growing 10% week over week.

The great thing was: it is often said that when pitching, traction trumps everything. Certainly looking back, since we were first time founders with no track record, traction was even more important. The problem was, whilst traction was the key part of our pitch and the traction was good, as soon as we switched our focus to fundraising our traction slowed.

A difficult few weeks of learning

The traction which we were proud of was largely driven by a lot of hard work. For the six months previous, the only focus Leo and I had was to build a great product which solved a real need, and to market it so that people who would find it useful knew that it existed.

We learned that fundraising is a full-time task, so what happened next was that around three weeks into fundraising, around three weeks after we had almost stopped working on the product and marketing altogether, our traction started to slow dramatically. We had some long-tail traffic, but a large portion of the traction was driven by articles about Buffer which we were triggering on an almost daily basis.

We essentially started to lose our most valuable asset in pitching Buffer. To add to the struggles, we were almost one month into our allowed three months in San Francisco on the visa waiver program, and we were also quickly running out of money because we didn’t realise how expensive the Bay Area is. With only two months left before we would have to move on from San Francisco, we were eager to raise the funding we had decided would be so valuable for building the startup further.

However, one of the things we learned while figuring out how fundraising works is that two months is a very fast amount of time to close a seed round, even for the most experienced founders.

A tough Saturday morning conversation

One Saturday morning around three weeks after we started our attempt to raise a seed round for Buffer, at the apartment where we were sharing a single room (alternating between one sleeping on a bed and the other on the floor on an airbed), Leo and I talked about what we were going to do to try and turn things around.

We had been trying for three weeks, and we had learned a lot about how to raise funding, but we now knew that a joint effort from both of us in order to try to quickly close a seed round was not going to be successful. We needed our traction to continue, since the fundraising was going to be a longer task. We had very little cash left, in fact I was actually borrowing money from Leo, who was well into his savings.

So we needed a new strategy. Since I was the coder, we decided that I would be the one to work towards keeping our traction going, which I would do by building the product but also by doing all the marketing tasks which I was much less experienced with. Leo, on the other hand, would focus entirely on fundraising and learning more, and trying to figure it out. I would be pulled into meetings only when we reached a point where we were discussing terms.

We knew it was going to be extremely difficult, with many highs and lows for both of us, which we would need to shield each other from and remain positive and optimistic. I think we both believed we could pull it off, but we knew there was a good chance that we might end up back home on a plane to the UK without closing the funding we sought.

An amazing high: Being accepted into AngelPad

The next few hours taught us how crazy life as a startup founder can be. We were both truly at a very low point, and we often look back with fond memories of that moment since it was a great example of the struggles founders have to go through.

Around 2 weeks into our attempt to raise funding, we had noticed that AngelPad had a class coming up, and that even though the deadline had passed, they were accepting late applications. Since we were struggling, we applied. We didn’t take too long over it, though, and we quickly moved back to focusing on our fundraising efforts. We had a number of emails back and forth with Thomas, Gokul and others in the AngelPad team, and even had a Skype interview with Thomas. Still, we weren’t too confident we would get in.

After our memorable Saturday morning discussion, Leo got a call from Thomas. We had got into AngelPad and would receive $120,000 in funding for Buffer. We’d go through the 10 week program with 14 other startups and have a demo day at the end, and we would be taught about how to raise funding. It was simply one of the most incredible moments of my life and I remember a real feeling of elation, compounded by the fact we had just had to make a very difficult decision a few hours prior, which no longer mattered.

AngelPad proved to be a significant part of the Buffer journey, and enabled us to get some amazing advisors and investors on board when we did our fundraising after demo day. Although it was not easy, after the struggles and learning we had gone through we were fortunate to be able to raise a $400,000 seed round for Buffer.

I have realised that when I have low points, they are the times where the most growth and learning occurs. I would therefore not change a thing about those tough weeks.

Have you had some truly low points during your startup journey so far? Have you found that these moments have taught you some valuable lessons? I’d love to hear from you in the comments.

Photo credit: TexasEagle

How to get more replies to the emails you send: be specific

"We live in a vague world. And it gets vaguer all the time. In this environment, the power of the specific, measurable and useful promise made and kept is difficult to overstate." - Seth Godin

It’s easy to be vague, broad, and to never commit to a particular direction. It’s frightening to be specific.

One of the key things I’ve learned in the last two years of doing startups is that to make real progress, it’s important to be specific. I think this applies beyond email, but with a specific example I think it’s easier to understand.

Why it’s hard to be specific in emails

I was recently looking back at some of the emails I was sending out when I was just beginning my journey with startups. It was quite frankly embarrassing. In almost every case the emails were far too long and had no clear call to action. Still, emails are consistently somewhere that I see new founders struggling the most. They rarely get a reply and they often wonder why.

What I’ve realised, is that it’s actually very difficult to be specific. If we take the example of trying to get a meeting with a well-known investor, then it’s easy to think that we should let them choose the time. So you say something like this:

How is your schedule looking next week?

It seems sensible. They’re probably much more busy, so if you suggest a time to meet it’s likely that it won’t work for them.

How vagueness fails to clinch that important meeting

"A large array of options may discourage consumers because it forces an increase in the effort that goes into making a decision. So consumers decide not to decide, and dont buy the product." - Barry Schwartz in The Paradox of Choice

What generally happens when the investor receives the email is that they have a number of options for “next week”. Rather than spending the effort to make that decision, they instead “decide not to decide” and you get no reply to your email. It happened to me countless times.

How I learned to be specific in emails

I was quite lucky - I was forced to improve the emails I was sending, because we were fundraising and email is still by far one of the most useful tools when raising investment. I learned by making the mistake over and over, and then deciding that a new approach was required.

I asked advice from many people and discussed our approach with my co-founder Leo. I read lots of articles with great insights such as the following from Elad Gil:

Add specific times. This reduces the friction to scheduling as if you leave it open ended it (a) does not convey urgency and sets up the timeframe within which you will meet and (b) makes the investor work harder to figure things out. Don’t put the burden on them to suggest a time.

How to write emails which get more replies

After many failed attempts to get meetings, I adjusted my approach. Instead of:

How is your schedule looking next week?

I started to say:

Would 10am on Thursday at South Beach Cafe work for you?

The above is from a real email that I sent during the time we were raising our seed round.

The interesting thing, is that by simply making that choice for them, it doesn’t mean it will always work for them but it means it is much easier for them to reply with a slight adjustment. We’d often get a reply such as:

Thursday is tough, but Friday could work.

or:

I could do 10a but it would have to be in Hayes Valley as I have a 9a and an 11a there. Would La Boulange in Hayes work?

From here, we were often able to confirm a meeting within one or two emails. This technique was crucial for us in securing investors for our seed round.

Have you tried being more specific in your emails? I’d love to hear about your experiences with this too.

Photo credit: Juli

How coffee shops helped my startup

Right now I’m sat in a great coffee shop in Tel Aviv writing this blog post. It’s got a casual feel to it which is relaxing, yet there are people here with laptops hustling away. I come here every Saturday to work on my personal project of helping others through my blog posts and emails.

Recently Jason Shen wrote an awesome post on the importance of coffee meetings in Silicon Valley, and it prompted me to think about the role coffee shops have played for me as an entrepreneur in the last couple of years.

What I’ve realised is that they’ve actually been a big part of my lifestyle and have served me very well as places to both get lots done and have important meetings.

4 amazing things that happened in coffee shops

Only when I looked back at the journey of Buffer so far across four very different parts of the world did I notice that even whilst moving around and being within very different cultures, so many of the key milestones were achieved in coffee shops. Let me explain with four examples:

Getting advice from amazing people

When we first arrived in San Francisco last year, before we had funding, we were pretty clueless about the fundraising process. We came across Mat Johnson, an AngelList Scout, and we reached out to him to see if he’d be willing to chat to us about fundraising and AngelList.

He replied back and suggested we meet at Coffee Bar in the Mission. We had an amazing and helpful meeting, casual yet purposeful and succinct. After the meeting, Coffee Bar went on to become one of my favourite places to work from and we even hosted our “Buffer & Coffee” meetups there.

How we raised funding from coffee shops

After AngelPad demo day late last year, we focused 100% on closing our seed round for a couple of months. I’m not sure how it has worked for everyone else, but for us coffee shops had a key role in our seed round. We had meetings with over fifty angel investors in dozens of different coffee shops across SF, from SoMa to The Mission and South Beach to Hayes Valley.

The coffee shop environment was perfect for raising an angel round. It was great to pitch investors in the relaxed environment of a coffee shop, we just pulled out a laptop and ran them through our deck. In particular South Beach Cafe, right around the corner from the AngelPad office, is the one place we met many investors and advisors who we were lucky enough to get on board. Here’s how we ended many of our emails with investors:

We’d love to meet and explain our vision for Buffer in more detail. Would 4pm on Monday at South Beach Cafe work for you?

Perfect for developing partnerships and strong connections

We’ve also met people in coffee shops in order to discuss partnerships for Buffer and make some very cool integrations happen.

We met Linden from IFTTT at his local coffee shop The Grove and discussed how a Buffer action in IFTTT might work, as well as the whole flow for a user. Within a couple of weeks it was done and available to both of our userbases, and it has been one of our best received integrations to date.

A great environment for helping others

As some of you may know, I love to help others on a frequent basis, and I’ve found it’s a key thing that makes me very happy.

I almost always meet founders in coffee shops when I’m doing a 30 minute session to help them with their biggest startup challenges.

The atmosphere of a coffee shop makes it easy to quickly get into a very open conversation, where we can really get into the current specific struggles the other person is having. I’ve found I can almost always use my own experience or knowledge of other people’s experience to help them with some concrete steps forward.

Have coffee shops helped you in any way for your startup or personal projects? I’d love to hear about your experiences.

Photo credit: Martin Fisch