The Struggle is Real

We’ve changed the names and location to ensure privacy but the details are true. Thandi is the founder and CEO of a small, but promising, app-based logistics company in Austin, Texas. She’s moved around a lot, and tried the business model in a couple of cities on the East Coast, but it just never seemed to take off. Without a college degree, she had to pursue other paths to financial independence. She began her career in the relocation industry in her early 20s.

By the time she turned 40, she figured that she knew enough about home moving to start her own company. Moving is a notoriously challenging niche to find success within: it’s difficult to find people who want to carry pianos, refrigerators and other bulky items and home-owners are understandably stressed out. Inevitably, furniture gets damaged. People rarely take the time to leave a good review but all that it takes is one scratch to a treasured antique to light up a litany of bad reviews.

So, Thandi did what most movers do; after enough bad reviews come in to thwart her ability to secure new customers, she picks up and moves her business to another state under a different name. After a couple of her businesses failed over the course of about 12 years, attracted to the vibrant art scene and open culture, she decided to set up shop in Austin with her life partner, Rita. Now, in her 50s, she’s happy personally but was stuck professionally.

‘Ideas are easy. Implementation is hard.’― Guy Kawasaki

She got the idea for an app-based relocation service after hearing about a similar company in New York. With Austin booming as a tech hub alternative to Silicon Valley, and given the large influx of people into the state, there seemed to be a market need. Besides, there are no rules (short of patent infringement) against starting a company that has the same business model and focus of another. It’s called competition and it can be healthy for a marketplace.

So, Thandi started her tech-based moving company. Together, Rita and Thandi pumped all their savings into designing an MVP (Minimal Viable Product) and launched the business. Friends and family made some tiny investments to move them forward. Today, they have a reasonable flow of business coming in but it’s barely enough to sustain operations, let alone grow. Thandi realized that she needed more capital to expand her tech platform, offering of services and outreach.

Thandi began shopping her business around to Angel investors who generally make an emotional connection to the deals they do. Specifically, to the founders behind the deals. However, as a middle-aged, LGBTQ woman of color looking for investors in Texas, she wasn’t getting many meetings or call backs. She was struggling.

As an underdog in the tech industry, she was at a loss over what to do next. Her business can continue at its current rate, but she wants to build something for exit within a couple of years so that she and Rita can retire comfortably. Texas’s rapid growth means the market is ripe and the app has great potential if the right investors back her. Unfortunately, an independent financial audit by a CFO-for-hire revealed that her corporate and financing structure had too many blind spots for an investor to ever take them seriously given the nature of the moving business. After reading as much as she could online to learn more about fundraising, she was still at a loss about what to do to make the company seed-round ready.

What she needed was someone to act as an intermediary – someone who knows the ins and outs not just of the investment world, but of scaling a business for success. She needed a mentor to guide her through the process of making hers a company that’ll be ready to enter its next growth chapter. And, she needed deep conditioning and education in fundraising. That’s how Thandi found us and decided to learn the way of the Growth Warrior.

 

Promise Phelon is The Growth Warrior
Promise Phelon

AMA

Today’s question comes from Charles. He asks:

What does it mean if my deal is SHOPPED?

Let’s begin by saying, getting shopped is not necessarily a good thing but it may not be all that bad either. Investors typically shop your deal as a “market check.” What they’re doing is taking the pulse of other investors as directional insight to nudge your deal towards closing, or, to put as much distance as possible between you and the investors you’re seeking funding from. Investory have to be wary as their reputation and ability to generate returns for their lending partners and other stakeholders is critical to their own existence. Shopping your deal also provides investors with a bit of “CYA” (cover your ass) protection in anticipation of a future event where your business goes bust and disgruntled shareholders come forward seeking restitution for a bad investment.

And if you as the founder shop your deal, that can also go either way – it all depends on your approach. At the seed round stage, shopping your deal is an accepted practice. As soon as you get one term sheet, have a few investors identified – on speed dial – and request a meeting. But you want to take a serial versus parallel approach. It’s best to approach investors selectively, a few at a time versus taking a “spray and pray” approach. The investment community is pretty tight-knit and the word on the street will get around quickly if you’re reaching out to dozens of investors at the same time. Qualifying your investors for fit, upfront, towards greatest likelihood of conversion, is the superior approach versus blasting out an investment opportunity to the street. Here’s a bonus tip: once you connect with an investor to review the opportunity, don’t hound them with increasingly urgent messages as that will signify desperation and tip off the investor that you’re shopping your deal.

 

WEEKLY WRAP-UP

The Weekly Wrap-up highlights key news stories in tech over the past week. Of course, no surprise, the emphasis will be on the underdog entrepreneurs, their challenges and their victories.

  1. Supporting startups and the founders behind them is an essential way to boost the economy. LINK
  2. Latinas are on the move. We need to create safe spaces and encourage underestimated entrepreneurs to drive innovation. LINK
  3. Here’s a brilliant lesson in EQ – emotional intelligence – through the lens of one of the brightest innovators of our time, Elon Musk. LINK

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