Raising $1.3M in Seed Funding and How I Did It

Disclaimer: What worked for me may not work for you.

I raised a round of seed funding recently.  I’d been working hard at it, and at the same time working hard with my co-founder and team to build a product and a company.  We’re far from done but a recent chat with Amy Puliafito at a Rock Health XX Dinner made me realize I need to pause, take a breath and acknowledge a few things that helped me and may help other women (and men) out there who are trying to do the same thing. 

Fact #1: I am a woman building a startup in Silicon Valley competing against a field of, mostly, young men.  The odds are against me.

Step 1: Stop worrying about being a woman or [insert whatever reason you think you’ll fail here] and focus on your strengths.

Focus on the strength of your idea, team and timing.  If you want an amazing blog on the definition of tech, team and timing go here (warning, my co-founder is not for the faint of heart; he’s no brogrammer—scorching of earth commence).

You are going to have to pitch and get rejected more times than you can imagine.  A VC once told me kindly (and I mean really, really kindly—as in “I want to spare you the pain of failure” kindly), “Below us are two floors of seed stage startups, the average person is male and under 20”.  Deep breath. OK. 

With odds like that, if you’re ready to jump in this pool don’t worry about being a woman (I mean with odds like that, what was worrying going to change?), focus on what you can affect—your idea, pitch, team, tech, timing.  You’ll make a difference by executing and succeeding.  If you are a woman and your target audience is too, use that to your advantage.  No one knows your audience better than you do.

Fact #2:  I’ve spent hours learning/doing the mechanics of incorporation, capitalization, and startup operations.  I know another woman entrepreneur who films herself pitching 12x a day.

Step 2: Prepare.

I know my cap table.  I’ve raised money on a convertible note and negotiated a priced round and I know the pros and cons of each.  I’ve incorporated a company…myself…but I know when to get and how to use an attorney.  I know the vocabulary and I can answer questions with confidence.  Excel is my friend.

Educate yourself on all these things—incorporation, funding, operations and everything else (Caveat: I already knew how to ship product).  It’s all out there to read if you look. Brad Feld’s posts on term sheets are particularly helpful.  Valuations and specific mechanics may change by the year (month) but the basics are all there and very well discussed.  VCs like Mark Suster and Dave McClure make it their business to tell you just about everything and more (thank you, sirs) and they all argue with each other so listen to their arguments. You will need to be able to answer questions about your company in any period of time and any order so do yourself a favor and learn it in your bones.  Or, as my sensei sometimes required when we practiced sparring, pitch blindfolded.

Fact #3: It took me 8 months to raise $1.3M.  I hear it took Pinterest longer.

Step 3: Don’t Follow the Herd and Don’t Worry if Your Raise Doesn’t Look Like “Their” Raise.

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Raising my seed round felt like mountain climbing looks—one agonizing milestone at a time.  That’s ok, we were building product and moving forward.  Evaluate yourself and your raise on the strength of each investor you attract.  If you are able to attract smart investors you are fine, it doesn’t matter if it takes longer than the people around you.

You will hear stories every day that so-in-so raised $4M in four days on AngelList.  Tomorrow it may be you, but until then don’t judge your success by those anomalies.  Don’t chase an outcome you can’t realistically achieve.  Focus on investors who will evaluate you and your business outside of the flash funding lens and on the merits of your team, tech and timing.  Is there a time to reconsider, to stop, if it isn’t going well?  Yes, but I can’t tell you when, you must be honest with yourself.

Fact #4:  Men are great.

Step 4:  Learn to judge people quickly and well.

I have amazing women on my team who move mountains every day to build our company.   Three of our advisors are women who dominate their field.  However, the only people who have invested their money in our company, and in me, are men.   If you missed Dave McClure’s thought provoking post on women investing I recommend you read it.  Unfortunately, my experience supports his view.

Men are not our enemy, they are our allies – find the good ones, discard the rest.  Remember, it’s not personal; it’s about building great companies. You’ve read it a zillion times, it’s true: Do not waste time on anyone who wastes yours.  Learn to tell the difference, male or female.  Learn to tell when someone is giving you an excuse.  And, as with anything worth doing, there are contradictions:

If the money is offered, take it. However, you must learn to say no to money, if it’s the wrong money, even when you’re not sure how you will meet payroll.  

Good luck, don’t settle, fight hard.

No “A” for Effort

I was thinking about elite performance today. Some people go after it, some are scared of it, some reject it, some are content to sit and watch it on TV. No matter your stance I challenge you to deny that not all people are created equal, or if we are, we sure don’t end up equal in the end.

Nature, nurture, does it matter? Each of us face a moment or maybe moments in life and choose to make something of them, or not. Our choices and opportunities are as unique as we are—they are a function of our place and time, of our different strengths, weaknesses, talents and challenges.

I’m not talking about gender, race, or any of those other easy fall-back excuses as to why one or the other of us didn’t see and take our chances, I’m talking about elite performance at the individual level, not a demographic one. Some people just explode onto the scene and define it. I’m reminded of Craig Kelly who you may not know because he died way too young in an avalanche doing what he loved. He’s a legend in snowboarding, in the NW and on Mt. Baker, his home mountain, where I learned to snowboard.

The Craig Kelly’s of the world are one in a million—although timing may be everything—the rest of us build our elite performance one training session, one life experience at a time. Call us late bloomers. We see the top and strive because to strive is to live.

I was reminded of this recently after attending a meeting where women presented their startups to an investment group focused on funding women-led businesses. Now, to start, I think it’s great that someone out there is interested in giving women a leg up. Women need to help women succeed—that’s where, in my opinion, group effort is useful and worthwhile. However, toward what level of performance? In entrepreneurship, only the elite succeed and it is important to fail when you aren’t good enough, learn from it and try again (or get out while the getting is good). I came away from the meeting disappointed that women are not holding other women to a high enough bar. The women contemplating investment were not consistent in demanding that the women presenting to them be, or be working hard to be, elite. And, that’s a problem.

I don’t think any of us really believe that we get a ticket in to every club just by having a pulse. Strapping a snowboard on my feet doesn’t make me Craig Kelly. But, wow, can I appreciate who he was! I have snowboarded at a high level and I’ve taught it. I know what elite level snowboarding is, I know the bar, and that’s how I know I haven’t achieved it even though I’ve done scarier, harder stuff on a snowboard than most. Craig Kelly was in a class of his own. In his time, he defined the sport and the experience and it was beautiful. Having him out there made me better.

We do each other and ourselves a disservice denying that there are multiple levels of performance to everything we do. While we all choose different challenges in life, we can all choose to excel at the ones we do. There is room for only a few who are the best at each pursuit, who set the bar for the rest of us, and to join that club you must, bottom line, be that good. Life is not a game where everyone wins and I do not support any program or fund for women, or anyone else for that matter, that does not paint an honest picture of what’s required to win even if its focus is to offer a stepping-stone toward that goal.

So what does that mean for women in tech, practically speaking? The list of successful female entrepreneurs in the tech world is so short it’s almost non-existent. I want to increase the number of talented women in tech; I’m tired of being the only woman in the room meeting after meeting, job after job. But, we do not help women become successful entrepreneurs by making them think they’re in the club when they aren’t. We help them by setting the bar high, communicating it clearly, recognizing those who have the potential to hit it and respectfully but firmly telling the rest to go home. I’m even sceptical of women only programs–when was the last time you trained for an event in conditions that did not mirror or exceed those you expect to encounter in competition and still expect to win? Oh, and by the way? You don’t have to have gone to math camp or be able to write code to have a job in tech but that’s a topic for another blog.

Learning is a process and there are programs out there that teach entrepreneurship in a very real way and women should compete to be accepted. Venuetastic’s recent funding by Y-Combinator is a great example. However, getting a firm “no”, particularly when it is honestly delivered by another woman who’s been there is equally if not more instructive. Women should absolutely mentor women…brutally. Let us push each other forward as we rip the scales from our eyes. This business is not for everyone, male or female. It is hard, scary, and fraught with very real danger. To compete you must be able to swim in the same pool as the men and be better, what the heck do you think they’re doing? Competition means everything will be used against you, including being a woman. Men are using everything against each other to win why should it be different for us? If you’ve ever played a team sport you know this is the rule. The difference in entrepreneurship is that the stakes are real and they don’t end with the buzzer. Use every tool you’ve got. But wait, do it with integrity—I didn’t say it would be easy.

Know this, high tech entrepreneurship is one of the most dangerous games on earth; don’t let anyone tell you otherwise. If you are really playing the game you are bound to lose everything, at least once, as well as everything you borrowed from the friends and family that love you. Your ego will receive an extreme beating and if you can’t recreate a tougher, more balanced and self-aware version of your ego you will fail. Train! Study your competition, learn from them and then develop your own unique style based on your strengths. I don’t want to read any more posts about whether or not it’s ok to cry at work. That is irrelevant. What you need to perfect is the ability to decide the appropriateness of any emotion at any given time in the course of your day as an entrepreneur and the leader of your company—when to cry, when to tell a joke to break the tension, when to shut up, when to motivate and when to wait. If you screw up, own up and keep going. Seek out brutally honest mentors (especially men) and re-evaluate your strengths and contribution every day. Remember, you don’t have to be CEO to be an entrepreneur so be honest about whether or not that’s your best fit as founder—the success of your company depends on it.

As in life, the key to succeeding at entrepreneurship is “know thyself” and there is nothing quite like entrepreneurship to strip the extra away. Once you do, you will never again mistake mediocrity for a helping hand.

Good luck, don’t settle, fight hard.

Opportunity is Not Convenient

One of the best pieces of advice I’ve ever received was from a surfer who said, “Surfing is just like life, it’s all about timing and position.”

I was thinking about those words today and how life brings you opportunity when you least expect it and almost always at the worst possible time. It’s one thing to catch a wave, it’s quite another to catch it at the right time and place with foot/pounds of water swirling all around you and numerous other dangers (reefs, rocks, sharks) awaiting your slightest mistake or hesitation. The confusing part is often you will be in the best place and position to catch it when you feel the least prepared. This is a theme repeated throughout the ages—carpe diem—to rise above the routine, all the obligations and seize the day even when it all conspires to drag you back.

Four years ago I decided to sell a home in Seattle that I loved, pack up (or, in most cases, sell) everything I owned, leave all my friends and family and move to Charleston, SC (a place I’d never been to before), to stand up a high tech start up. I was over 40 and a woman – we just don’t do things like that, what was I thinking? My friends gave each other those knowing looks, my family was upset. While I’d made software since ’89, I’d never done my own startup. I’d recently met a co-founder/CTO I knew had both the vision and experience I needed and we agreed to go into business together. I decided to ignore convention, practicality and good sense. What the hell was I going to do with the rest of my life anyway, garden? I took the proceeds from my house sale and invested it in the company.

Some believe we each only have one moment of “grace”. I believe there are moments there all the time, right under our nose, waiting for us to notice. Moments that can be accepted or ignored, amplified or left to disintegrate into the vapor they’re made of. Who knows, maybe the universe gets tired of waiting, but lately I’ve noticed that some moments walk right up and hit you like a 2×4. For me, the decision to found a start up was like that—it was a choice to take a very different path than the one I was on and I knew it was an opportunity that would not come around again.

It couldn’t have been a worse time for my family – my father’s health was deteriorating rapidly and I’d always been there to help. I was leaving them when they needed me most. But, opportunity doesn’t ask if it’s a convenient time, it only cares if you’re ready, and ready doesn’t have a thing to do with convenience for you or anyone you care about, or if it’s appropriate, or whether or not people will think you’re being selfish. It also doesn’t mean you won’t feel guilty, confused, scared, angry and sick to your stomach. It just means you’re ready to survive the experience. Neither of my parents wanted me to go, but as they had done before with each one of my hair-brained adventures, when it was clear I would not change my mind they sent me off with these words: “do a good job”.

Two and a half years after we founded our startup we sold it. It wasn’t easy. Let me restate that, it was awful. There were people involved who wanted more than their fair share and it took a long time for me to get everyone to agree to the original terms. Money, as I’m sure all of you know, tends to bring out the worst in people. That, and my Dad started to die in the middle of it.

My Dad was a huge figure in my life. As a little girl he taught me how to find my way in the woods, the names of plants and birds, how to swim (by throwing me out the back of a boat, of course), how to fish and most importantly, how to conduct myself. He had funny sayings like “no holidays”, referring to those places you miss when you’re mowing the grass. What he really meant was “no holidays” in life. If you’re going to do it don’t half-ass it.

My Dad made Buddhists look mean. He was a gentle, soft-spoken man who would carry Wolf spiders outdoors (if you’ve ever seen a Wolf spider you know what I’m talking about). But, he was also the man who, when our dog bit a kid on the street in front of our house, picked up a shovel and his .22, walked the dog out into the woods, dug a hole, shot the dog and buried him. He loved that dog.

My dad died the morning after I signed the papers to sell our startup. I had stayed in town thinking I had time. I didn’t mention my dad was dying to our investors or the buyer because, well, he would not have wanted me to use his death as a negotiation device. That’s poor form. The buyer had putzed around all week, stalling, to get us to agree to a lower price and finally scheduled a time late Friday night to sign. I had a ticket to fly home on Sunday. Dad died Saturday morning.

When the call came, I was standing in a karate seminar taught by the head of our dojo. It was a big deal, the man had traveled all the way from Hawaii and people, shoulder to shoulder, surrounded me. When I heard my phone ring I knew it was my Mom calling me to tell me Dad had died. Sometimes you just know. I thought about walking out of the seminar then but knew that Dad would have wanted me to finish—no holidays—so I did.

The following week, along with my Mom, cousins, aunt and a couple friends, I dug a hole for Dad’s ashes in the Maki family plot, a mile down the road from the farmhouse where he was born. We used the same post hole digger my cousin’s had used to dig the hole for their father, Arne, and we buried Dad’s ashes next to Arne’s—the last of their generation. I had paid the full price for my choice to leave but I knew my Dad wouldn’t have had it any other way.

I think about my dad just about every day now and when faced with tough decisions I ask myself “what would dad do?” and it always seems to bring the right answer. I was thinking about him again today as I prepare to set out on a new, crazy adventure and watch the people that might join me make their own tough decisions. Most of us are small town kids, now grown up, who have made the most of the opportunities presented to us—education, career, family—and it is difficult to choose to embark on a choice that puts ourselves first. Country kids are loyal and tend to stick close to home and the people who have helped them along the way.

But I say to them, like my Dad taught me, there is nothing you can’t do. But, to truly seize the day, you will have to shed all attachments, even our small towns and families (not forever, just a little while), and go big like they raised us to do, even when you feel you’re not ready or it’s not the right time. It’s never the right time for anyone else, only you. If it’s a huge opportunity worth risking it all for, you will recognize it by the fact it requires more than you’ve ever sacrificed before, maybe even the good regard of friends and loved ones (again, not forever, but maybe a little while).

If you make that choice, dive head first, carpe diem, do a good job and no holidays.

The Christmas Squirrel

 

It’s mid-December in Charleston, South Carolina, which means alternating days of rain with temperature fluctuations of 20 degrees or more overnight, somewhere between tropical and frigid but not quite reaching the extremes of a Colorado spring.
 
It was cold and rainy outside and the squirrels were running back and forth across my roof with acorns, as they had been all fall. I was sitting in my chair by the fireplace (it was not lit, this is important as you will see)—comfortably drifting between reading and dozing, when I heard a “cry” similar to cats fighting followed by a “thump” in my fireplace. I’d forgotten to close the flue after my last fire and now a very pissed-off squirrel sat staring out at me through the fire screen.  A few months ago I’d found a baby possum in my recycling bin drunk off stale beer but this was a first.
 
Sciurus niger, the American Fox Squirrel, is the largest species of tree squirrel native to North America. They are also sometimes referred to as the Stump-eared Squirrel, Raccoon Squirrel, Red Squirrel, or Monkey-faced Squirrel. Muddy Waters even wrote a song about them. In urban areas the Fox Squirrel enjoys an abundance of food (acorns, primarily) along with a dearth of natural predators and hazards, which may explain why this particular squirrel did not realize the consequences of base-jumping down my chimney.  
 
My fire screen is the flat, single paneled variety and thankfully I’d left it flush against the opening so the squirrel was now trapped.  This gave me time to think.  Take a moment to run through a list of things you would do if faced with an angry American Fox Squirrel in your fireplace, remembering that squirrels can carry rabies, bubonic plague and are, for all practical purposes, fuzzy-tailed rats. Could I construct a box or container the squirrel would run into? Fine, then how do you propose I force the angry squirrel into the box? Could I get one of those traps, bait it and shove it in the fireplace without the squirrel getting out?  Was there a squirrel eradication hot line? Each carefully considered option seemed to end with an angrier, bigger, rabid-er squirrel leaving a soot-stained trail through my home as it attacked me followed by my long, agonizing death by rabies (complete with grieving family and friends at bedside, city fathers speaking out against squirrels, PETA protesting the captured squirrel’s treatment, etc., etc.).
 
I decided there was only one rational course of action:
 
Call Mr. Cramer.
 
Everyone has at least one person in their life that they can call in a true emergency. If you’re a woman, it may be your father, brother, or boy friend. It’s the person you call when your pipes freeze, you’re stuck by the side of the road, or you have a squirrel trapped in your fireplace. You call them because you know they have probably faced the problem before and will have the tools, knowhow and fortitude to get you out of the mess you’re in. And, not to be underestimated, they will do it efficiently, focused on solving the problem, without making you feel really stupid for getting into the mess in the first place—or at least you’ll laugh together when it’s over. My favorite example of this “type” is Winston Wolf played by Harvey Keitel in Pulp Fiction. As with most of Pulp Fiction, be forewarned there is lots of foul language:
 
 
Lately, for me, that person has been Mr. Cramer (who bares no resemblance to Winston Wolf in manner or language), the father of Thomas Cramer, one of the young men who work for our company. 
 
“Mr. Cramer, I have a problem.”
 
“Yes.”
 
“I left the flue open and a squirrel fell into my fire place and it’s trapped. Have you ever dealt with this situation?”
 
“Yes.”
 
“What did you do?”
 
“I got my gun, filled it with birdshot, put on a pair of safety glasses, cracked open the fire screen and shot the squirrel.”
 
“I don’t have a gun.”
 
“Would you like me to come shoot the squirrel?”
 
“Yes, please.”
 
Twenty minutes later Mr. Cramer arrived with Thomas who’d been helping him put up their Christmas tree when I called. Mr. Cramer got out of his white truck wearing a pair of orange safety glasses and carrying a metal case like Jean Reno in The Professional. In front of the fireplace he carefully unpacked a revolver, showed me the ammunition as he loaded it into the gun and then positioned his flashlight to shine on the squirrel that had now perched on the smoke “shelf” a couple feet above the grate. Thomas and I backed up to separate doorways, ready to run for it in case anything went wrong (brave “seconds” we were not). Mr. Cramer cracked open the fire screen and aimed his gun.
 
“Crack!” I’d expected something HUGE, an explosion like the kind you hear during gunfights on TV. A revolver shooting birdshot sounds like a large firecracker. I have to admit I was a little disappointed until the squirrel came sprinting between Mr. Cramer’s legs out of the fireplace and directly toward—yes, you guessed it—me. It had been hit by some of the shot and was leaving a trail of blood across the floor. Trying to be useful, I’d positioned myself in front of the door to my screen porch, thinking I could open it just in case the squirrel did exactly what it was doing now—furiously running around, spewing blood, and getting closer and closer to me. I opened the door, jumped in back of the squirrel to herd it outside, and watched it ran out onto the porch where Mr. Cramer ended it’s poor life with another shot.
 
The whole episode took no more than two minutes, which is an eternity in minor household catastrophes. Squirrel dispensed, Mr. Cramer calmly put its body into my garbage can and Thomas helped me clean up the blood.  After carefully repacking his revolver, Mr. Cramer walked back to his truck carrying the case, neatly backed out of my driveway and returned home to finish decorating the Cramer’s Christmas tree.
 
I suspect some reading this will be shocked or unhappy at how I handled my squirrel “problem”. I’m sure there was some way I could have gotten it out of the house alive but for various reasons I won’t go into, this just wasn’t the holiday for me to risk rabies to save one squirrel’s life. This year it was right to call Mr. Cramer.   This year it was good to give in and not try to be too self-sufficient. This year it was a good year to ask for help and enjoy being helped.
 
It feels like there aren’t that many places left where you can solve a crazy squirrel problem without calling someone in a uniform and a panel van who charges you $100 just for showing up. I’ve lived in the South for two years now; most of that time consumed with running a new business, not battling squirrels. Through the new friends I’ve made, I’ve come to find that the South, like rural Washington State where I grew up, is full of helpful, hardworking, practical people who will selflessly show up at your house late on a holiday evening to shoot a squirrel trapped in your fireplace, help you clean up the mess, relive the highlights for a few minutes and then head back home to finish doing whatever they were doing as if it were no big deal. 
 
And, that’s a big deal.