In continuation of the prior post:
So VC Randy Haykin proceeded to make an introduction to Bessemer's Dave Cowan, for investment consideration. Randy might co-invest if Dave got excited. The first meeting with Dave would be by phone. We knew we'd show better in person, but we liked Dave's sense of interest so we jumped on the opportunity to talk by phone. My co-founder Ben and I did the phone call from Studio C behind my house, on my Vonage line which wasn't the most reliable at the time. Dave was on his mobile phone, doing the call from Disneyland! So picture Ben and I hovering around a speaker phone and Dave on a mobile next to Mickey. Dave was quiet at first, so it was hard to read. There were some struggling moments in trying to tell our story, since we were talking sequentially thru slides, which Dave didn't have privy to. After a few minutes of pitching, Dave chimed in saying "How much are you looking to raise?"
We told him $5 million. At that point he told replied saying "This sounds more like a $2 million deal to me."
I was intrigued by how quickly he was able to make that assessment (which coincidentally would be the funding amount we would eventually raise for series A). That's what happen in the big leagues.
A week later, we went to see Dave in person, and his admin brought in sandwiches. We wanted to do the slide show, but he just wanted to see the service working. So Ben busted out his giant laptop and got on their wifi network, and showed what little of the service we had in place. Dave had some insightful thoughts about user experience, but ultimately thought we should raise less and get it out into consumers hands.
There is a lot to say for technology service companies raising little money, putting a service together, getting people to use it, and THEN going to raise more money, for build out and scale. That way more questions are answers and assumptions validated. Sounds good, except we required a technology integration between our platform, a VoIP network and a call platform. This all requires more money than a typical web 2.0 service.
We would have to move on and see what other VCs have to say. We never had interaction with Dave again, so he wasn't chasing us nor vice versa. It was early in the season, so we had to play the field some more anyway.
Lessons learned:
1. If your story is complicated, avoid starting off with a phone call. Then figure out how to make it sound simple enough for a phone call.
2. Make sure your demo is as good as your slides, because you might not get to pitch your slides.
3. Don't leave it to the VC to tell you your fund raise amount is this or that. Make sure your story has enough answers in it to warrant the amount of money you're raising.
4. Disneyland isn't your best place to be pitching someone:)
Next post will cover our meeting with Benchmark Capital.
-MC
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