VC Minute – quick advice to help startup founders fundraise better
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Rich Maloy:
This is Rich Maloy with SpringTime Ventures, bringing you the VC Minute, quick advice to help startup founders fundraise better. Our guest this week had the experience of raising both during boom times and during the market downturn. I’m sure many of you that are listening have had the same experience, or if you haven’t, you can hear the stark differences in Alex’s experiences. And what I love about this is how he wraps up the week. So stay tuned for how he changed his mindset through this process.
But first, I’d like to thank AVL Growth Partners for being a great partner to the VC Minute. Outsourcing your finance and accounting functions is a no-brainer for startups. And you need to work with a firm that specializes in high-growth companies. Founded in 2009, AVL has fueled the success of over 1200 early-stage companies. Specializing in raising capital, M&A, financial modeling, scaling, and bringing financial transparency and a disciplined approach to the companies they work with. Head to AVLgrowth.com and explore how they can be pivotal to your growth.
Alex Ryden:
I’m Alex Ryden, founder and CEO of Guest House. Guest House is a Denver-based company. We’re the 1st tech platform for home staging. We bring together top designers and furniture from the best brands to make staging faster, easier, and more accessible than it has ever been.
We can talk about raising during boom times versus raising during challenging times. We had to fundraise 1st, right at the tail end of 2020. so we closed our 1st seed round in 2021. That was a 3M dollar seed round that was led by Range Ventures.
Raising during boom times, I think, was definitely my experience my first go around. I actually didn’t try to fundraise at all. A good friend of mine started a company called Soona, Liz, she’s awesome. She was partnering with us, and I just was talking to her about the business, and she said, you should fundraise. And I said, nah, I’ve had some experience with it and with other companies that I wasn’t running, and I don’t know if it’s right for this business. I’m not sure.
And she said, “Well, you should really at least meet this guy, Chris; he’s great, starting a fund here. I think the tech you’ve built is amazing.” And she was our total advocate. I have so much to thank her for, especially looking back. She introduced us to Range, and we ended up having a great conversation with Chris Erickson and Adam Burrows.
And in the same week, I was talking to Chris and Adam, I was also talking to a strategic about potentially licensing our business to them and having them pay us, and just cash flowing it really well. They found out that I was talking to a fund, Chris and Adam gave us a term sheet a couple of days after we had conversations, and this strategic gave us an LOI to acquire the business.
So I had a really good challenge on my hands which was do I sell or do I build? I had 3 weeks actually of debating that and trying to figure out what the best path was. And we had some stuff going on with the family too. It was a lot over 3 weeks. And just came to the decision that we wanted to build and so we ended up taking the term sheet from Range and raising the rest of that round.
I think once we took the term sheet, it was probably a 3 week process, but it felt like 3 years, if that makes sense. Because you’re just like, oh, my gosh. Well, what if I don’t get a yes? And what if this isn’t closed? But thinking back, it was such a short timeline. 3 weeks to get something done was no time at all. And we had a lot of people just wanting to get into the deal, especially after we closed that first tranche of $2 million into it.
Once, we had that. We kind of had a period of time where we kept talking to folks. Again, it felt like 2 years, but it was 2 weeks where I kept talking to folks and I’m like, I’m just getting a bunch of no’s. I’m getting a bunch of no’s. And then finally, we were talking with a couple of funds, and they knew each other. And they ended up having a conversation. One committed to me on the phone. The other one obviously knew it was happening, and immediately called me after, and then we had three more funds that were after those trying to get in.
Once it was subscribed, it was oversubscribed very quickly.
About Guest House
Guest House is the first company to automate home staging for agents and enable commerce for homebuyers across the US real estate market. Their proprietary technology makes the furnishing process as simple as ordering groceries online, with every home installed by real interior designers using furniture from top brands, all in as little as one week. Today, Guest House is available in Colorado, San Diego and Orange County. Learn more at guesthouseshop.com.
About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast – get to know AVL Growth Partners at avlgrowth.com. (Sponsored)
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