I have written a lot about my journey as a founder and CEO. I’ve written about guest lecturing at the business school that once rejected me. I’ve written about being rejected by YCombinator. I’ve written about measuring my team’s performance. And I’ve written about communicating with my investors. Today, I want to talk a little bit about what it’s actually like to be a tech startup founder and CEO with nearly 60 angel investors, literally the who’s who of Texas’ technology startup community, without VC backing.
First off, I should say that I didn’t exactly plan it this way. When I first started working on Localeur, months before a website existed and weeks before the name of the company was Localeur, I made a list of 12 individuals whom I thought had three specific things: 1) vision, an ability to imagine things that didn’t currently exist, 2) compassion, an ability to seek first to understand then to be understood, and 3) financial capacity, an ability to write a check of $5,000 to $25,000 into a then-nonexistent startup.
To be quite frank, I thought I’d pitch those 12 people then I’d raise funds exclusively from institutional venture capital firms in Austin or Silicon Valley. Man, was I naive. I was naive about the chances of an Austin consumer startup getting backing from Silicon Valley VCs and also about the chances of a Black founder getting backing from any VCs. It took me several years to match my own experience as an early-stage founder and a Black founder and CEO with the statistics that are now widely shared highlighting the slim chances of such as startup getting institutional backing.
Thankfully, the 12 people whose names I had written down were people I trusted, people who knew both my work product and my work ethic, people who wouldn’t judge me based on the color of my skin, and people who had those three key qualities.
The first two people I shared the idea my co-founder Chase White and I had been working on were successful serial entrepreneurs whom I had deep admiration for.
First up was my friend Clayton Christopher. Clayton is a former client of mine from my days running my own social media consulting agency back in 2009-11, and someone I deeply admired as an entrepreneur. He founded and led both Sweet Leaf Tea (which he sold to Nestle) and Deep Eddy Vodka (which he sold to Heaven Hill Brands) from the concept to growth stages and is now a Founding Partner of CAVU Venture Partners, which invests in some of the best up-and-coming consumer products startups. Thanks to Clayton, I was connected to two successful investors, Joe Ross (co-founder of CSID) and Chris Shonk (a serial angel investor) who put in the first $75k or so into Localeur.
Next, I met with Brett Hurt, the founder and former CEO of Bazaarvoice (now the co-founder and CEO of data.world), who’d recruited me two years prior to work for his company pre-IPO. I fondly remember Brett telling me by phone, before I’d accepted an offer from my former boss and then-COO Heather Brunner, “Joah, I know you’re an entrepreneur, and you’re probably going to start many companies, so coming here to BV now at this time is going to be even better than getting an MBA from Wharton, and I went to Wharton!” Ultimately, both Brett and Heather passed on investing at that time, but Heather invested in October of 2013 and quickly became my first board member and Brett invested in the summer of 2015 (after I pitched him like five more times). Both Brett and Heather (now the CEO of WP Engine, one of Austin’s fastest growing startups) have become two of my absolute best advisers and advocates as a founder.
So rewinding back to January 2013, I had a 50% success rate. Clayton invested and Brett did not. But looking back, both became investors along the journey and both are people I continue to value tremendously as fellow entrepreneurs. The other names on that list included folks like Terry Lickona, the longtime producer of legendary TV program Austin City Limits, Dre Hayes, co-founder of lifestyle showroom and brand architect firm The Foundation, MICK, a globe-trotting DJ and brand ambassador, and few others whom I considered friends, confidants and advisor-level individuals. For each person, I emailed them something like a 12-slide deck, gave them a phone call (or met in person) to answer questions and share my vision and gave them my word that I would put more grit, determination and focus into Localeur than anything I’d ever done. All in all, 8 of the first 12 people I pitched invested pre-launch.
In March 2013, we launched Localeur.com with 15 to 20 of my friends here in Austin sharing recommendations on their favorite local places to eat, drink, shop, play, etc. Within four days of launch a prominent tech site (not TechCrunch), called us one of the “best of SXSW” and we were able to use that momentum to pitch Central Texas Angel Network, secure funds from members there, and continue on our lifecycle as a startup.
Over the years, my “success” rate of fundraising pitches has diminished as I’ve pitched hundreds of investors in Silicon Valley including just about every major VC firm there between 2014 and 2016 without so much as a specific metric we need to reach in order to secure institutional backing. So while I could go on and on sharing the story of how I’ve gotten each of my nearly 60 angel investors to believe while the “powers that be” did not (a healthy dose of contrarianism, indeed), I’ll share a few strategic specific folks who’ve invested to help us raise more than $3 million:
Tyson Tuttle, CEO of Silicon Labs; Blake Chandlee, EVP of Outcome Health and former VP of Global Partnerships at Facebook; Capital Factory, Texas’ top technology startup incubator and accelerator; Chris Burney, executive director of San Antonio Angel Network; Steve Pamon, COO of Parkwood Entertainment and former executive for JPMorganChase, HBO and the NFL; Jeff Eller, public affairs leader and former director of media affairs for President Clinton; and Bridget Dunlap, a food-and-beverage industry pioneer and entrepreneur in Austin.
What these strategic investors, and my entire angel investor roster, represents is not only vision, compassion and financial capacity, but also diversity, integrity, leadership and passion. They’ve run public companies and global brands; they’ve seen and invested in dozens of startups of all types, and they’ve provided invaluable connections as VCs often do. Of my nearly 60 angel investors, more than half have re-invested with 6 to 18 months of their initial investment, including my five largest investors by check size and each of the members of my board of directors. In the last four years, Localeur has scaled from exclusively Austin to more than 50 cities worldwide, we’ve secured enough revenue to put us on a path to profitability this year, we’ve received countless national press and we’ve done it all without institutional VC funding, with a small team, a capital efficient approach and right here in Austin, Texas, with a Black founder and CEO.
To answer the question of “what’s it like to have so many angel investors?” my answer is simple: it’s liberating.
Liberating from the naivete I had as a first-time founder several years ago. Liberating from the perception that only institutional VC-backed startups could scale and succeed. Liberating from the institutional biases and prejudices that hinder minority founders like me in Silicon Valley. And, most of all, liberating from the expectation that I’m going to fail as a startup founder if I don’t raise millions of dollars from the “powers that be”.
My cap table may have a lot more names on it than many other startups, but I feel free. Free to focus on our mission, free to grow the business as I see fit, and free to be myself.