How To Raise Capital When You Have NO Revenue
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Written by Amber McDonald, Cofounder & CEO of Indemnis.
My name is Amber McDonald, I am the CEO and Cofounder of Indemnis. We make the integration of drones into the national airspace possible, by enabling flight over people – which is currently prohibited. Indemnis expands the commercial use of drones and enables services such as drone delivery.
Indemnis has used non-traditional funding streams and raised at very high valuations from day one.
To date we have raised over 4 million dollars from private individuals and defied all odds of what people consider “traditional”.
How The Heck Did It All Come Together?
My Cofounder Alan and I owned a previous business together, we worked in the film industry, and, utilizing drones we could see the efficiencies. We believed in the future of how drone technology was going to change the landscape of virtually every facet of business, so when he came to me and asked for help to make this happen, I was in.
I knew things weren’t going to be easy but I wasn’t afraid to fail and I definitely was not scared to go for it with someone I knew would always have my back. We simultaneously push and complement each other daily.
We constructed a phenomenally passionate team, most of them had been helping Alan on the side for years without getting paid.
The best advice I can give is find your people, and treat them fairly. Select carefully and then empower them to do the work.
We have had our ups and downs with successes and failures but I always respect the effort and time people are giving us in their lives and I try to make sure they know they are appreciated.
Soooo… we had a team and a material technological breakthrough. We had an idea, but not a finished product. And we needed money!
Our lawyers suggested we use a financing instrument that Y Combinator introduced in 2013 called the SAFE (simple agreement for future equity) note. The easiest way to explain it is that it’s like a convertible debt without a maturity date. It made the process quick and easy to close money, but we still had to find investors.
In a state where there is no infrastructure for startups or entrepreneurs (Alaska), we were fortunate enough to be able to reach out to friends and family to ask and gather everyone they knew. We hosted lunches and open houses to give our pitch.
For every 10 people we would bring through, I would estimate we have closed 6-8 of them.
Three Lessons Learned To Deliver A Great Pitch:
If you have a complex problem to solve, simplify it. You will lose investors if you try to get super technical – if they want to know more they will ask.
Give your pitch to yourself in the mirror, give your pitch to your family, your friends, record yourself and watch it again… practice, practice, practice. Make it succinct, practice and refine the pitch until it works. You can never practice too much and even today I am constantly refining and making our pitch stronger.
The last and probably most important tactic is to believe in your own story. Not just think it is possible but truly deep down inside you must believe in what you are doing and your ability to lead it to fruition. Own it. There are going to be many people who doubt you, push you, and try to derail you – do NOT get defensive and just go with it. There is something to learn from every situation but if you believe in your direction you will come out on top and others will join you!
Over the years I have been motivated by the people who laughed at us and told us no. You will be faced with some rough moments and it is those deepest and darkest moments, when you need to suck it up because that is when your team needs you the most.
We have raised over $3.5 Million in SAFE funds from friends and family with no VCs or entities on our cap table. We have raised another $475,000 from crowdfunding and are still actively raising. Even with a great idea, it is never easy.
One thing I tell my staff is, “the word impossible does not exist within these walls.”
Our mindset from the beginning is that we are growing a billion-dollar business, to do so you have to take risks. That doesn’t mean be reckless, but it does mean be comfortable being uncomfortable. This allows us to push the limits and get things done. If you fail, learn from it and move on.
Bottom line… Believe in your story, believe in your team, focus on making a great product, bust your ass and never give up. Don’t just talk about what you want to do, just get out there and do it.
I dive deeper into all of this and more with RajNATION on Startup Hypeman’s Discover Your Inner Awesome Podcast.
I’m excited for you to listen!