#1 Raising Capital (pre-product) in 2020, hyper-personalisation in 2021
A quick rundown on how the EveryAfter was kick-started and raised capital (pre-product!). This week's idea is hyper-personalised eCommerce brands.
Raising Money in 2020
Normally this would be a weekly update but since this is the first blog and a fair bit of progress in 2020 - we’ll summarise it in one go. The key insight we will go over is how to raise capital pre-product and whether it’s a good decision.
For me, interestingly enough, 2020 began as a year where I was taking a break from entrepreneurship. As COVID-19 ramped up, the world and my situation changed significantly. My job at Draper Startup House, a community/hospitality company geared to support entrepreneurs in their early days, had become very difficult and most of our executive team (including myself) were made redundant. For the company, this was the best decision to make. For me personally, this accelerated my plan to leave in 2020 and kicked EveryAfter into motion.
The Inception of EveryAfter
Let’s cover the inception of EveryAfter.
I wanted to focus on a problem in the education/recruitment space. What I learned over the last few years is that working on things that you don’t care about is hard. Even if you care about working on cool technology or enjoy growing businesses, you have to actually care about what your company does. This is why I couldn’t find the motivation to continue leading companies in the blockchain, beer or international trade space. On the other hand, I have worked in education and have helped people get jobs for free for 6 years.
Now that I had a sector and broad problem area, I had to find a good part of the problem to focus on. Saying I want to solve unemployment is great but not necessarily the best pitch.
When looking for a problem you want to find the one that has the highest impact with the lowest effort. Something very painful for users that you could solve easily and build a business around. That’s the sweet spot.
I won’t lie, being a 2nd/3rd/4th+ founder makes fundraising infinitely easier. If you’re a first-time founder looking to raise pre-product my advice is: don’t do it. The best conditions to raise pre-product is where you fall into the “Great Teams - Great Markets” category which Niki Svecak, Managing Partner at Blackbird does a great piece on.
Next figure out what you DO have. Maybe you don’t have a product but what do you have? I had a few experiments and MVPs we ran at Draper Startup House in the education space, I had a good track record of building enterprise-grade software and scaling businesses and I had a strong vision of what things should look like.
Making the deck. To raise money, you need a deck (Note, no one wants your business plan so don’t bother - try a business canvas if you really feel the need). For the most part, you’re not going to do a formal pitch. Most of my fundraising happens in a restaurant, bar, arcade or a hot tub. The investor deck is more a document for people to read later on to get a deeper understanding. I’d suggest creating two versions of the deck - one for pitch events (a pitch deck) and the other for sending to investors with more detail (an investor deck). (Here’s my investor deck: Everyafter Investor Deck.) The pitch version would be similar with much fewer slides and barely any text. (Quick plug but this is the level of sharing I’ll be doing if you end up subscribing 😉)
Once I created the deck, I started sharing amongst my network asking them if they knew any investors who would be interested. For better or for worse most fundraising is done through warm connections or introductions. Cold outreach can work sometimes but I found that my response rate was fairly low.
In total, I reached out to about 60 investors, pitched at 2 pitch events and had 10 investor calls. Note that, it’s important to do background research on each investor, as each will be interested in different aspects of your company.
In November, I closed my round with Blackbird VC. They provided AUD 350k in funding at a $4M pre-money valuation. (Pre-money is the valuation of the company before the capital is injected) They also let me raise another $150k from other investors.
We also applied and were accepted into the Startmate Accelerator (an additional $75k) Accelerators are a better bet when doing pre-product/early-stage startups. As a solo founder, accountability, support and mentoring can be hard to find. Accelerators help fill that gap for me personally.
Although we had enough money to start EveryAfter, I ended up raising another $75k. I did this for two reasons; 1. it’s unclear what is happening in this macroclimate, so cashing up early to weather storms is always a good idea, 2. It lets you ‘buy’ advisors/mentors
Going deeper into point two, you can find get angel investors (high net worth individuals who invest in startups) or other investors to invest in your company, and leverage their expertise. I wanted two mentors: 1. A super technical mentor who could help my rag-tag engineering team. This ended up being Loong (CTO at REN Project), who is one of the best CTOs I’ve ever worked with and an experienced teacher for tech staff. For the second mentor, I wanted someone who could help us with their network and possibly aid in our next round. This was David Lu (Managing Partner at 256 Capital) a friend who has supported me with his network and fundraising over the past few years.
In total, EveryAfter is worth ~$4.5M. - But this means very little until we actually go out and build something.
With a newly incorporated company with $350k ($150k will come in Jan/Feb) and a mission to “Prevent Mass Unemployment by 2030” we were ready to go
Hyper personalised Ecommerce
One of the ideas I’ve been really interested in is how to sell personalised products to consumers. Many companies create personalised shirts, mugs, socks, artwork that have done really well. Have a look at these:
https://makemeyellow.co/ (they can’t specify what that means for legal reasons): bespoke artwork that resembles a specific TV show that you can get digital or physical prints for.
https://www.etsy.com/au/market/custom_dog_socks (print socks with your dog’s face on it)
The Night Sky: They create a custom star map with a location and timestamp where you can add a message. For example, this is the night we met. (and it prints what the night sky looked like then and there)
This is becoming really popular especially in 2020 when ecommerce is booming. It begs the question: what other things can we start applying this too?
A specific idea I had was around trading cards (such as pokemon) which has a massive boom this year. We have seen a 300%+ increase in the number of people joining the hobby in 2020 and the number of purchases of other things such as video games etc. have also boomed. Thinking along the same line as Make Me Yellow, what if we did ‘Turn Me Into A Card” where we take some inputs such as images and other text and turned people in YuGiOh or Pokemon trading cards. (Obviously, we would need to be subtle about what they mean) but there would be an amazing niche that could become a few hundred thousand dollars per year business.
What does execution look like?
It’s not as easy as doing the whole drop shipping, turnkey business but there are ways to make this very streamlined and automated. It may also require more work and capital.
Fivver: I’d look into Fivver and see what kind of people you could hire to make these images for you for very cheap (<$5 for simple things like dog socks or a little bit more for custom illustrations) A quick look shows me gigs from $30-50 which is a great price point. Here they will take a photo and draw a custom illustration with you with perhaps your favourite pokemon.
Launch a quick eCommerce website with some form inputs for the user to allow them to submit images and other text which could be through Shopify or you can use Webflow Ecommerce to have a much more sleek system.
Manufacture and Logistics: nowadays things have become 100x easier to make products and get them shipped to your users. Your best bet is to use a print on demand service such as Printify. However, to get a custom card stock print in the shape of a card may require some research to find a good distributor.
Facebook Ads: Facebook is the key to marketing these things, watch a few videos on youtube to get your head around this. This playlist is amazing by the late King Comm. Might be a little outdated but the rest is up to you to test and figure out!
Influencer Marketing: This space like many others is extremely influencer-centric where influencers have a strong say on what products are great and can generate sales like no tomorrow. Definitely using this route, you can get the best return on investment (ROI) on your ad spend.
That’s basically it, you can do most of the work such as the photoshopping (for basic cards) and fulfilment yourself at the start and scale from there. However, I believe the real money is in creating modern custom illustrations of people which requires actual skill. So, in this case, you’re really doing a ‘drop-serving’ model where you're a middleman between illustrators and customers with potentially some actual physical print distribution.
Let me know what you think by commenting below, I’ll get back to them as soon as I can. Also if you want more amazing ideas and updates on what it looks like to build a world-class company from ground zero, feel free to subscribe for weekly emails.