I run One Million by One Million (1M/1M) – a global virtual accelerator for startups. 2017 is our seventh year. And one particular trend keeps me awake at night. Thousands upon thousands of entrepreneurs have approached us for help with their funding at a stage where their chances of getting funding is ZERO. We can’t help them, regardless of how powerful our investor connections are. We can’t help a startup get funding before they become fundable. It pains me to see how many entrepreneurs have no idea what makes a startup fundable.
So, my humble advice to all entrepreneurs: please learn to assess your own probability of getting funded. Watching this 2 minutes 53 second video would be a very good start if you need a crash course in fundability.
Want introductions to Angels and VCs? A fundable and validated business is a must. >>>
At one time, the flash sales sector was a favorite with investors. We saw the valuation of several companies like Groupon, Gilt Groupe, LivingSocial, and Zulily skyrocket. But as the sector got washed in funding, companies stopped delivering on hyper growth. Investors fled from the scene and the companies collapsed. Gilt Groupe was acquired by Hudson Bay for a quarter of its estimated value at its peak. >>>
Jifiti started life as a B-to-C gift-giving service. That didn’t work. Read how they maneuvered their way to a successful B-to-B business.
Sramana Mitra: Let’s start at the very beginning of your personal journey. Where are you from? Where were you born, raised, and in what kind of background?
Shaul Weisband: I was born the United States. I moved with my family, when I was seven, to Israel. Israel is pretty much where I was raised and went to school. That’s where I founded our company Jifiti at the end of 2011. Our development and operations teams are still there. Our US office is based in Columbus. That is where I relocated with my business partner around four years ago to head our local offices here in the US and focus on our business development and marketing. >>>
The annual Consumer Electronics Show 2017 was held in Las Vegas last week. This feature from Engadget presents its version of the best of CES 2017 including the best startup, accessibility tech, gaming product, wearable, home theatre product, connected home product, drone, and innovation. For this week’s posts click on the paragraph links. >>>
Sramana Mitra: You talked about working with a syndicate on AngelList. Did 500 Startups introduce you to the AngelList syndicates personally, or did you do that cold?
Zvi Band: We did a very good job of building relationships with our customers. One of our customers said, “Hey, I actually know someone who’s a part of syndicate on AngelList. Could I introduce you?” We got connected that way. I always recommend to entrepreneurs to look at your own users and customers first because, oftentimes, there are some well-connected people who already believe in your mission.
Sramana Mitra: In general, you have to be introduced. That’s the experience we have. So in 2015, you raised $8 million, and you now have $2.5 million in ARR. Is that a VC round? >>>
Sramana Mitra: Who was this angel investor?
Ryan Caldwell: I don’t have the permission to mention him by name. He’s a rather private person. I had worked with him in the past. He invested in a previous startup of mine. We had a good working relationship. He was familiar with me and my management style. He’s invested in a few companies but keeps a low profile.
Sramana Mitra: Which venture firms and which banks did you raise money from in your series A?
Ryan Caldwell: USAA was part of leading that round. Digital Garage (DGI), TTV Capital, and Commerce Ventures also came in.
Sramana Mitra: What was the total round? >>>
Sramana Mitra: Let me get a couple of specifics there. What was the price point that you settled on?
Zvi Band: We’ve continually changed our prices. When we first launched, we charged $10 a month. By the beginning of 2014, we charged $20 and $40 a month.
Sramana Mitra: What does that mean?
Zvi Band: We had two different pricing plans. What we’ve learned is that customers were not just willing to pay one price. There were customers who were a little more budget-sensitive who didn’t care about all the functionalities we had, and who were willing to pay a lesser price for lesser functionality. That was our $20 a month price point.
Then we had a price point for people who were wiling to pay us more, and they were willing to pay for some of our power functionality. We actually started off >>>
Sramana Mitra: The first hundred that you closed, were you able to close them on the phone?
Ryan Caldwell: Yes. We had to visit some people but, we were able to close most of them over the phone.
Sramana Mitra: Teleweb sales, yes. Of the people that you closed in that first wave of going after the smaller financial institutions, how did those accounts grow from those couple of thousand dollar accounts? Did they grow to become larger accounts?
Ryan Caldwell: A lot of them were buying the first product. Not a huge percentage of them grew into larger contracts. The most significant of those grew rapidly through “land and expand”. Some deals that were $20,000 to $100,000 a year would grow to $2 million a year account. >>>