Be in fundraising mode or not.
Team Letter | December 4, 2023
December 4, 2023
Happy Monday, Alpaca!
Well here we are – it’s DECEMBER! I cannot believe how fast this year has flown by - and how much we’ve got ahead of us this month! I am excited to share it all with you. This month, we have a few big goals:
Sell at least 3 new schools or districts on our Beta program (yep, three this month!)
Sell 200 Welcome Back Packs to be distributed the first weeks of January.
Deliver a BEAUTIFUL December pack to our amazing teachers.
Build a prototype platform of our Beta surveys & reports (based on finalized Key Drivers) to launch on January 15.
Be fully ready to raise our seed round starting January 1.
Whoa! Those are big, goals. I’d imagine the one that you feel like we all have less visibility around is #5, so I wanted to talk a little bit about what it takes to “be ready to raise $3M.” What does that even mean?! Worry not, we have a wonderful mentor in Paul Graham, the founder of Y Combinator, who wrote the most important essay I’ve ever read about fundraising. It’s still the guide I use to this day.
What I learned the first time raising money for our company is that the sooner you commit Graham’s advice to memory, the faster you’ll close the round. Start here: http://www.paulgraham.com/fr.html
There are 25 lessons in his essay, each valuable in their own way. But we’ve got a big week and who has time for 25 lessons today? So here are the 3 I tape to my mirror when I’m fundraising:
Be in fundraising mode or not. If you’re fundraising, it’s a LOT of your job. And to do that job, you’ll be giving up other important parts of your job like sales. So don’t be sorta raising money, a little bit kinda. (Also: investment vehicles with rolling deadlines like SAFE Notes will make this more difficult. Set your own deadline and be done with it.)
What this means for Alpaca: On January 1, 2024 I will be in fundraising mode. Ahead of that (aka the month of December), I will be in pre-fundraising mode, preparing the list of things you see below. Our goal is to close our round by March 31, 2024. At that time, no more fundraising mode.
Hear no until you hear yes. Most funders truly want to be helpful, kind, and encouraging. Because of this, they might make you feel like they’re going to say yes when they are in fact going to pass. Don’t mistake kindness for commitment.
What this means for Alpaca: We’re gonna hear some “no” and that’s okay! That’s the game. We’ll keep pitching new funders until we have the true commitments of each.
Get the first commitment. It doesn’t matter how awesome your pitch deck is. It will never be as good as another investor saying “listen, I’m not going to let this one pass me by. You should get in!” Get someone to say yes, then ask for their help.
What this means for Alpaca: We’ll be asking investors for help in introducing us to others. We’re already getting HUGE help on this from Ben Williamson at InvestNebraska. You’ll see him, Dusty, Paul Smith, and many others on my calendar a lot in the coming weeks and months.
So what does it mean, practically, to be prepared to raise? Here’s my Plan:
Ready to Raise
Deadline: January 1, 2024
Create the materials that tell our story
Create 3 pro formas (budgets) - with different growth scenarios, showing:
That we can generate sufficient ARR before the next raise
Gives us At least 24 months of runway
Strong assumptions that show why we believe the model
Build a stunning pitch deck that tells the story of the packs + data + growth we’re going to see in the next 2 years. It should show:
Where we’ve been/what we’ve learned
Early traction on the data product
Where districts pay for it
A story that lets us sell this company for $200M
Get ready to build the technology
Submit application for the Nebraska Prototype Grant ($75K to help with tech)
Build a prototype data platform/report for the Beta program, with the work around our Five Drivers
Sell and invoice for whatever we can before we start raising
Complete all invoicing
Sell at least 3 new schools or districts on Beta program
Run a process on identifying and pitching investors
Identify a set of potential “lead investors” and make outreaches WITH our new deck and pro forma
Send updates to all of our existing investors, with information about our upcoming raise.
Set up meetings for January
Take a deep breath, put on big girl pants, and start raising!
If you’ve got ideas, questions, want to help, or want to stay informed on how it all works, hit me up! This work is challenging but EXCITING too – and when it’s done, we’ll be ready to show the world what teacher celebration and teacher wellbeing look like!
Let’s go, Team Alpaca!!!
Karen