Posted: Wed 27th Jan 2016
In a new series of monthly posts, supported by GoCardless, Enterprise Nation is featuring companies that have raised money. We're asking the founders to tell us how they went about it and to share tips for other business owners considering doing the same.
The first profile is Andy Stephenson, founder of Weekend Box Club, a subscription business that delivers activity boxes for children.
How old is your business?
Weekend Box was born in April 2013.
How much money did you raise?
Initially none. I used a small amount of savings and bootstrapped myself. After we'd worked out some details about our boxes and subscription elements, I applied for a Start Up Loan to help make our boxes and sell more of them!
Much later down the line, around two years in, Northstar Ventures came to us with a proposal of how they could help us really accelerate our growth with some funding. We took a small seed round from them in April 2015.
Why did you raise the funds?
The Start Up Loan was to move into production of making our own boxes and to increase sales. The venture capital funding was to accelerate growth once we'd spent a lot of time refining the model.
What was your secret to success in raising the money?
The longer you hold out the better deal you get! Plus investors start coming to you, which is nice!
Raising money for early stage businesses is just about risk and opportunity; the more established you are and the more demonstrable progress you have, the lower risk you are and the higher valuation you can justify (as a general rule of thumb).
What surprised you most about the fundraising process?
Venture capitalists can actually be quite nice! We have a great working relationship with Northstar Ventures. There are lots of stories of nasty investors but our investors are genuinely bought in to the business and understand that sometimes things don't always go to plan but you just need to adapt your plans to succeed.
What one tip would you offer to anyone else looking to raise funds?
Constantly question if there are other ways to exist and grow without raising money. Having investors means you're often taken further away from growing the business because of more management reporting, board meetings etc. I'd advise against doing it in the early days because these are most crucial for getting off the ground and getting your first customers. Don't let anything get in the way of your success!
Show me the money! is supported by GoCardless, a simple way to take recurring payments and to get paid on time, every time.
Also in the series: