TechIreland | Blog | On Fundraising with Jules Coleman
Jules Coleman is a great entrepreneur and a wonderful conversationalist. Irish, based in London, Jules has appeared many times before on this blog and as part of TechIreland’s €100M Campaign, we chatted again earlier this week on the topic of fundraising for her first company Hassle, and her new company Resi. The full - and raw - podcast is here. A summary of key insights, including some paraphrasing by yours truly, is below. I recommend the full podcast however, it has many more rich insights than I could squeeze in here. Enjoy!
The Accelerator Route - Jules and her Hassle co-founders were first time entrepreneurs so while they recognised that the accelerator offer of 6% equity for £15K sterling didn’t seem like a good deal on paper, it was the cachet not the cash that mattered: “We didn’t have a business at that point, we just had an idea. As first time entrepreneurs we extracted a lot of value from the SpringBoard (now Techstars) programme. We learned a lot and secured the validation we needed to leave our jobs. It also gave us structure and introductions to specialists in marketing and finance, angels and VC investors.”
Raising from Angels: “It took almost two years from writing the first line of code to securing our £250K angel round”. Hassle raised angel funding from 10-12 angels. Noone invested more than £50K and many were in for £10 or £20K each. She continues “Within that group of 10-12 there were probably 3 who were linchpins to the deal, and they brought in their friends. Very few people will make an investing decision by themselves. There are deal finders - people who have a nose for a good deal - the others will follow them. Most angels need the vindication and validation of others before investing themselves”.
Recognising the No: As Jules says, entrepreneurs tend to have an optimistic mindset so most of the time they’re hearing yes when it’s actually no. “It’s very rare to get a “no”. It’s usually a lot more ambiguous than that and you need to learn to filter those out and not waste your time. If people are not following up on your emails. If you feel like you’re pushing more than pulling, that’s typically a no, but there are always exceptions”.
And the Yes?: “A yes is, here’s a cheque!! It’s when they’re invested in finding out more, asking intelligent questions, not just having coffee meetings to chit chat about the future of the company”.
What About Bias? “I’m sure people wrote us off for gender reasons at the angel stage but there are lots of reasons why a business won’t succeed and if we had told ourselves it was for gender reasons we would have been giving ourselves a get out of jail card instead of asking the hard questions about the business. But, for sure, discrimination does happen and there needs to be very little tolerance for it. People need to called out on it”.
On to VC: Jules describes how labour intensive the angel process was and how the founders were “a little burned” after it. Then later that year they met Oisin Hanrahan at WebSummit who told them about a US competitor called Homejoy who had just raised $40M. When their investors back in London heard the news they responded “If they can do it, you can too”. Jules continues: “We agreed that if we were going to go out and raise VC we’d make it a short project, that we’d make sure not to derail everything else in the business in the meantime”. They packaged up their pitch, got lots of feedback and then went on the road. “We developed a list of VCs, then ranked them A, B or C based on fit and likely interest. We approached the C’s first knowing they’d probably ask the same questions as the A’s would. By the time we got to the A’s, we were pitch ready”.
A Double Act: Jules called herself and co-founder Alex a double act at VC pitches and emphasised how important that was as part of their fundraising process: “We’d use one liners at exactly the same point in each pitch. We always had each other’s backs in the room, always had that support. There was never a dynamic of feeling isolated”. She also talks about the Series A pitch being about the team, and the vision. ”Not too many investors are placing massive amounts of certainty around your data at that point. They’re looking at the story, your assumptions, your pride in how far you’ve come, your humility around the challenges ahead”.
After Series A: “Once you raise VC you put off the table the option of building a company that you can hand down to your grandchildren and that pays out dividends every year. That’s not why VCs invest in you”. “Once you’ve raised the money, most companies have 3 options - die, continue to B, C etc, or get acquired. You’re on that VC treadmill where you divide the money you have up over 12 - 18 months and then go out and start raising again. After 18 months we went out to raise our Series B £20M round and ended up getting acquired”.
More Thoughts on VC: After fundraising for Hassle and subsequently spending time on the other side of the table as an Entrepreneur in Residence at Index Ventures Jules says: “VC is not a good thing or a bad thing. It’s a form of financing like a bank loan but only a small number of companies should take VC and they are companies that can deploy capital at speed. Most companies can’t do that. Resi couldn’t deploy £6-10M now quickly enough to warrant taking it and we don’t want that pressure on ourselves either. There is a cachet with raising money from a highly rated VC and having an article in TechCrunch, but, it’s just funding”
“It’s not VC that makes your company good or bad. A good business is one that’s growing, where customers really love the product and where employees love to work. Funding is not a guarantee of success but it will add cost and expectation. With Resi, we’ve taken angel funding from people with connections in the industry but they own a very small percentage of the business overall. Fundamentally, we’re trying to run a profitable business, and that’s the first step”.
Considering Fundraising?: It’s easier to raise money for a business that’s doing well. In a business where a lack of funding is not the blocker, put fundraising on the back burner”.
Thanks for reading, Niamh Bushnell
PS - Intercom has just brought out what looks like a great book on growing a company. Check it out here.
Published: June 28, 2018