Sramana Mitra: How much investment did you get from Techstars?
Nevin Shetty: Techstars always puts in $100,000.
Sramana Mitra: How much equity did you give for that?
Nevin Shetty: Around 7%.
Sramana Mitra: You raised more money coming out of Techstars?
Nevin Shetty: Correct. We raised a million dollar seed round.
Sramana Mitra: What else is interesting in the story that is worth going over?
Nevin Shetty: I think what’s really interesting is, we have two founders from two different backgrounds. Personally, there were a lot of times where I was like, “I don’t know if I can do this anymore.” It’s very stressful and there’s a lot of risk and cost not only from a professional standpoint, but also from a personal standpoint. There were many times when I didn’t want to do this. Lizzie was the one who urged me on. We both fed off each other.
Having a good solid co-founder and partner is incredibly important. One of my friends basically sold his company because he didn’t like his co-founder. I’ve seen companies burn because the two founders didn’t get along. Having a co-founder that’s complementary to you and works as hard as you do is very important. The second most important thing is thinking about how you build your product. It should not just respond to users’ feedback but should actually go towards your end goal.
It’s something that we constantly battle with. We’re building this feature that the user wants but that doesn’t actually help our end goal of getting higher conversion because it’s tenuous. We’re continually thinking about features we’ll be building next month. That’s a constant battle but a very important thought exercise that we do on almost a monthly basis.
Sramana Mitra: I was recently talking to another entrepreneur who did exactly what you did – bootstrap with a paycheck – to significant level of validation and then got into YCombinator. My philosophy actually in the 1M/1M community is you should do exactly that. You should do lots of bootstrapping whether it’s using a paycheck of services, and get to substantial validation before you go to Techstars or YCombinator, which do have a good network and can give you, perhaps, a little bit of seed funding.
Mostly it gives you the network that gets you in front of quality investors. Those accelerators are operating as small-scale venture funds. For their economics to work, they need validated businesses. Would you like to comment on this point of view?
Nevin Shetty: I absolutely agree. One of the rewarding things of going to Techstars is seeing the business of Techstars. They are, essentially, a small-scale VC fund. They’re indexing their own fund. There are companies that just have an idea and go into these accelerator programs. It could be interesting because they’re just speeding up the process.
I think it was valuable for us to bootstrap this and then go through it. I’ve learned more because of it. It’s like business schools. Most business schools want you to take one or two years of work experience. It’s very similar to accelerator programs. You can go straight in with an idea but if you have something that’s validated and spent time bootstrapping, you get a lot more out of the program.
Sramana Mitra: It hugely enhances your probability of being accepted into these programs that have become extremely competitive. Two, what you get out of the program is significantly higher if you go in prepared with a business that is ready to go into a funding round.
Nevin Shetty: Absolutely. From a macro-level environment, you see a lot of the venture funds becoming more later stage. Companies that were seed funds are now Series A funders. Series A are now Series B. Same with accelerators. Our class was mostly companies that had one to two years of runway before coming into the program. That’s where accelerators are going. You have to have some validation because it’s so competitive now that they want to improve their odds as well.
Sramana Mitra: This is something that we do not require in 1M/1M. We do not take equity. We can work with you when you have an idea in your head or on a napkin. We specifically believe that you’re not really an incubator if you don’t work with all levels of companies. We do all kinds of acceleration work with validated companies. Because we don’t operate like a venture fund, we are able to work with companies that are very early stage and have no validation whatsoever but who are, like you, learning.
Thank you for your time.