The decisive moment we’re jumping back to in today’s episode is a moment when two co-founders have to decide whether or not to take outside funding.
In a co-founder relationship, each person is bringing their individual perspectives and past experiences into the decision-making process. How do you navigate such a scenario while protecting the relationship between the founders and also choosing what’s best for the business?
Today’s guest, Jane Portman, did exactly that. In this conversation you’ll hear how she quelled fears for both herself and her co-founder and closed a pre-seed round that, as she says, served as a multiplier for their time and skill.
James: So Jane, welcome to my time machine. When are we going back to
Jane: We are going back to February 20, 21 in
James: perfect. So what what's happening for you in February, 2021?
Jane: So 2021, um, we are talking about use list. The product I run, uh, we've been out, uh, we've been working on it since, uh, the fall of 2017. So that's, it's quite a few years. The product has been live since, uh, August, 2019, so a few years. And it feels like we've got our. Understanding of the product market fit, but it's not quite that wonderful rocket ship curve that we had hoped for even, uh, taking count the slowness of the whole game.
Still. Much to be desired. So it feels, and it's a one it's, it's a pretty weird transition time because in 2020, as the pandemic, uh, went on, we, uh, landed into tiny seed and accelerator that, uh, gave us some cash to burn, but not enough cash to do like a full shebang that you do with V. Folks. So that money started to sort of trickle out, not completely, but it was time to think about the next steps.
Are we gonna like shrink down the operations and, uh, Think about like staying a small team or shall we take up more money and, and grow, but it wasn't as, um, as easy as it sounds now, because there was no pain by numbers way to use that money, even if raise it. So I guess today we're gonna explore those conversations and, and things that happened between me and my co-founder Benedict at that time when we were on the edge of, should we raise or should we not raise,
James: Amazing. So you've kind of got this moment of inflection where you've got some progress. You need to raise some money and you've gotta decide, do you raise how you raise what you spended on? There feels like there's a lot of questions. In this moment.
Jane: Definitely. Definitely. And, uh, so for the context. Me and my co-founder Benedict we're, we're not, not super young. We're kind of seasoned kind of burned Benedict had had as a consultant, had some unpleasant experiences specifically with the VC funded companies. So he's really aware of the pains. I'm I didn't have experience with VC funded, uh, folks, so I wasn't as burnt.
Uh, it was more. Just the unknowns of it. That was scary. And, um, yeah, , I guess that was the, uh, some more background information. So we're sort of oldish sort of wise ish, uh, and looking at this from the realistic perspective versus, uh, something like we're gonna bang out next feature. We're gonna. Pump more money and it's gonna suddenly change overnight because by then we had already known that no, uh, most likely it'll be same, slow and steady kind of organic growth that we had, um, must have
James: Hmm, but, but it sounds like there's a bit of. Concern about taking, taking money and going to VC routes for, for both of you.
Jane: uh, definitely. And, uh, VC is not, was not the only route that we had considered and we didn't ultimately take VC funding. We ended up raising AE round using, uh, angels. So that's what we did ultimately. And, uh, Mentorship, uh, peers, um, our mentors at, uh, tiny seed as well. We're all very helpful in understanding what options we have out there and helping us get ready, sort of,
James: So, so, so in that moment, when you and Benedict are talking it through, what sort of things are coming up when you're thinking about bringing, bringing people into the business as, as funders.
Jane: um, I guess it's more. There are more reckless people than us. So both of us were thinking whether we, if, if we take on more money and more people on board, will we be able to justify their expectations to meet their expectations? If we were, would be able to perform as promised and, uh, what if we do take the money?
nothing great happens in the end. I was gonna look people in the eye at all in the end. So that was the kind of concern we had. And, uh, given the nature of useless as a product, we. Um, we have really picked a very hard battle for ourselves because, uh, useless for the context is an email automation platform for SaaS company.
So the sales cycle and the adoption curve are both pretty steep. Uh, on the sales part, we've got to replace, um, an essential tool in their tool stack. So it's not a decision that can be, um, made during an, you know, impulse visit to a lending page or something it's like heavily weighted. Serious, uh, choice that teams make to adopt a platform like useless to other.
James: so, so you've, you've, you've got this fear that you might not deliver on that people's expectations is that that's that's the investor side or potential higher side.
Jane: That's the investor side and then the potential hire. Of course the fear is there. What if we build the payroll and then are not able to meet that financial, um, financially after some time. So up to date, even after raising, we're still pretty cautious about, um, continuous commitments, like new people on team.
So we are very thoughtful about that.
James: Go. Going back to this idea of being wise ish.
James: And so, so you you've got these potential investors and there's this fear of letting them down or committing something and not delivering. And you said that Benedict has been burnt before.
Jane: I guess we haven't really named all the issues that, um, sort of fears that we faced and, uh, losing control is obviously one because, uh, especially with the visit funding, you have to change your trajectory and, uh, you get people on board and you get seriously a serious responsibility. Um, not just to each other, as founders, but also to, to the investors in terms of the tempo, the traction would have to muster and things like that.
James: and were you both feeling that the same amount that, that, that fear of loss of control?
Jane: I wasn't. I was more up for taking money. Benedict was more on the conservative side. One of the arguments that one of my personal mentors had, um, mentioned is that as founders, what we have is our skill and time. And if we can use. Money as a multiplier for that, uh, you can get better results from the same amount of time that you get.
Um, but, uh, with more hands on board and, uh, more hands on the deck. So that argument resonated with me a lot. Uh, so it was up for giving it a try and then Benedict was more in the conservative. and not to mention that we were at this weird stage when we were officially team of two, we were using some contractors, uh, but was still more doing it ourselves than delegating.
And it so happens that we have, we do have all the talent between the two of us that that's necessary to run a startup. That makes it harder because, um, we can keep, we could just keep doing everything ourselves, but that's not, not a great way to grow. So there was this moment of. Needing to scale marketing operations from just me towards more people on team and think from around February to.
roughly, uh, April, there were few months when, um, we grew, we brought more contractors on board. We had some growth experience, some of them good, some of them not so good, but was more of a transition from a two people team towards, um, more delegating. and, uh, realizing that we don't have to do everything ourselves and yeah, sure.
It's on the table. Like it's, it seems that the truth is on the surface. Like it's so obvious that, um, this is a trajectory, but, um, given the growth and everything, it's not as obvious when you're inside of it, whether you should like persevere and do more with yourself or whether you should, uh, go find professionals.
James: And it sounds like in that moment, there's a sort of conversations we had with your co-founder where it's it's you're not looking at it quite the same, like you're aligned, but it's, you've got maybe slightly different views on where you are on that, in that moment. So, so how, how do you go about having that conversation with a founder co-founder who you, you value and aligned with? But have a different idea of the way forward in this moment.
Jane: I wouldn't say it's a matter of a single conversation was more of a serious of conversation. Things unfolding over time. I do think that, uh, for me, it was helpful to muster a bit more courage and start taking those steps. In terms of delegation growing the team on the marketing side a little bit, sort of to illustrate that when we have that money, we know what to do with it.
So it was not just telling in one big sit down conversation, but more like conversations and, uh, you know, gradually moving into that new reality where that money could be more obviously useful.
James: Hmm, so kind of experimenting to show data.
Jane: Yeah. Yeah.
James: So that's, that sounds like quite a rational thing to do in terms of oh, If we have more money, we could maybe get more results from doing this, but it feels like within that, there's also some emotional thing around that loss of control or fear of letting people down.
How, how do you address that side?
Jane: Um, I don't know what was going on in Benedict's head, uh, but I have some idea probably as, as far as external, uh, stuff is concerned. So when we talk about January of February, he was more like unsure and confused that the trajectory doesn't look like what we wanted.
And then in a few months, It looks like things were going much better. We also launched a feature that looking in inside became our unique selling proposition. And before that we didn't have a unique selling proposition, our unique, uh, point before that was just simply focusing on SaaS businesses, but it wasn't enough.
And then we launched, uh, in April we launched a company accounts. Which is our unique selling point. So having that out of the door really helped because they, it was very well received. So just things were unfolding and it just took a few more months of, uh, things being done to change that perception of, uh, potential benefit over weighing the risks of it.
James: Hmm. So, so it's coming back to the idea of, it's not, it's not a conversation. It's not a moment. It's a, it's a combination of data feeling
and, and relationship. It sounds like there's, there's quite a high degree of trust between the two of you.
Jane: Um, I hope So Yes. At least I feel . I feel that way. Yes.
James: So you you've had this moment of like going, where are in this journey we need to do we raise, do we not? Where do we spend it? And you do some experiments. To figure out where you might spend it.
You decide to push ahead.
James: What, what, what happens now?
Jane: And, and then go for painful months of fundraising. that was
on me. I was hoping that we can do this relatively quickly and relatively painlessly because well, this year I wouldn't wanna be raising to be honest. Uh, but last year, the, um, ecosystem sort of felt rather. Ripe rather nice. And, um, there were some low hanging fruit, uh, institutions that we were going to to pursue.
So we wanted to raise on a safe note with a handful of investors. And, um, there were a few funds like Sahi fund, uh, the government fund Venia that. We were hoping, could just get on board and would be an easy leader for the round. And then we would be probably done pretty quickly, but those doors didn't open as quickly.
And, um, we were on, in a more challenging route. So I just went on, spend my Rolodex, uh, I don't know many. So I reached out to my friends and then in another, in a few weeks I reached to next tier of friends. And then I think the third or fourth time, I was almost pursuing like my past podcast guest as, as a podcast host.
So I was just, uh, trying to remember people that, um, It felt a nice connection with, and, uh, reached out to them and you'd re seriously, it's more like doing leg work until you stumble across the money because the funds did come from places I could never anticipate like, um, one. Customer vows. And, uh, by the way, I wish I had thought about reaching out to customers before cuz customers are your great allies.
So one of our customers made a number of introductions that just suddenly all fired and we filled out the second half of the round. Pretty. Uh, quickly compared to the first, uh, slow, slow one. So you never really know where that money's gonna come from. And the ultimate ultimate number of investors was, uh, 2223 and raised from 20 plus, uh, angels in the end.
James: So top tip there, reach out to your customers when it, when it comes to your fundraising.
Jane: Definitely. Well, it's not the thing, it's
not, you can't just
blast the customer list
with an email. it's it's a more, uh, still a very intimate thing. So in terms of the mechanics, I was just in the first email sort of, uh, without any numbers, I was just vetting the situation, whether it's applicable to them, whether with.
Hear more, some would say, oh, absolutely not me. And some would say, oh, I would love to hear more. Maybe I know someone. And, uh, yeah. And then I would go and disclose some numbers and, um, in the deck, et cetera.
James: Okay, sorry, in this moment, you've you've you've, you've done four hard months of fundraising. You've been quite. Resourceful in terms of finding out who to speak to. You've got the end of this. You've got your 20, 22. Was it 22
investors on board? How are you feeling right now?
Jane: uh, Relief would be the correct word
because in the middle of this fundraising process, there was a point where we hit like a little bit under half of the under 50% of our goal, let's say, so it was, it was some money, but it wasn't obviously the money we strived for. It was completely unclear. Like, what do we do?
I'm exhausted, you know, It feels like I've exhausted my, uh, my, my connections there, uh, definitely exhausted my emotions. Uh, do I call it a day and admit, admit that I'm like a fundraising failure? What do we do? And, um, ultimately decided to persevere a bit more and I'm very glad we did so,
Jane: uh, but yeah, that was a, was quite a summer, uh, over an emotional roller coaster that summer.
James: What, what was it that you think sort of, you said you, at that moment of having sort of exhausted, it felt like you exhausted your options and certainly exhausted your emotions. What was it that nudged you to keep on
Jane: I don't know, just like the type of person I am, I guess was like really a lot of serious work was done and it would be just shameful to let it sit and, uh, let it go, especially. So yeah, they wanted to prove that it can be done. I guess.
James: Which you did. So you've got your 22 investors now, which is potentially going back to something you said earlier, this, this, this fear of. control or, or outside input. how, how how do you and your co-founder are now feel about having
22 sort of other voices in, in and around your business?
Jane: It sounds, it sounds worse than it is in fact, because, um, it's not just voices. Most times these were people who had known us personally and were on the same line with who we are and what we do and what kind of business we have. So lots of friends, lots of just very good humans. Um, lots of people with the insights in the industry are willing to help and, uh, The mechanics of the safe note raised on the safe, um, are, are so that they don't have a legal decision making power.
It, they all had small checks and it's obvious when you invest 20 K in something that you're not gonna make like big decisions for them. So we just had that sort of divided and conquering, um, situation and no specific investor. Had, uh, any decision making power of EV over others or over us. And it was more like getting 20 plus allies on our, uh, business, uh, versus what, what you're saying could be the downside.
James: So it's interesting. So I think this is quite a common fear for founders. This idea of fundraising people coming
from the outside, bringing more voices in. It's interesting. Your framing of it as, as allies.
Jane: We've heard, uh, I'm not gonna say names,
but some peer companies who have done similar things, uh, but instead of going the angel route, they went straight through to VC at that stage. And they said that, uh, that was a bit too early, so they wish they could have gone our route to preserve a bit more freedom a bit longer before they commit.
To bigger growth. So it so feels that we did the right thing, like, but, um, with the Pree fund funding and everything, I've just had a conversation with another peer company that I raising right now. It feels like you're gonna get that. I dunno, half meal or something, and you're gonna like rocket shape grow, but it's, it's not a lot of money seriously.
Like, yes, it allows you to get some more hands on board. Uh, but it's not the kind of money that helps you, like purchase ads left and right. And just like poor money on things. It's definitely not the type of dynamic. So don't overestimate. Things you can do with it. Sure. It buys you time buys you, freedom buys you many other things.
Um, but not, not the VC type of trajectory for sure. So it's, it's like a stepping stone probably.
James: If we'd say there are those two route, just perhaps just for listeners, if you could just give 'em a bit of
what seed fasts is versus other, other funding methods.
Jane: So I'm by no means an investment professional. So it's my personal understanding of how things, how things work. So I guess everything that's under 1 million is considered a precede brown. So there is a wonderful guide written by Sahi Lavinya. I can happily share the link afterwards. He plays that out pretty well.
So that's considered a preceded round. You can get that from, an accelerator, from a fund or from a number of angel investors or a combination of those. And, uh, the most typical scenario is to get a larger check from some institution and then maybe leave a bit. um, space to allow for a few strategic angels in this case, angels are not used for their money.
They're used for their like input connection and what, what we've got 22 X , uh, in our case, we didn't have that leading, uh, and nobody was leading. So we just filled out the round with smaller checks and, um, um, the. For the same percentage of the company, we could have probably gotten a single VC check that would be larger.
Um, but that would come with, um, change of trajectory, sit on the board and everything else that comes with the VC. So, and would absolutely lock us into like raise more raise next. Et cetera, wrote and giving what's happening in 2022 these days. I'm pretty glad we're on, on it at the moment. Like we have a good runway in the bank, uh, to get us to profitability without having to raise.
Yeah, sure. It's on the table to raise, but it's not a necessity, thankfully. So that's nice.
James: Amazing. And so, so, so you've
got these 22 allies. how have you best found to, to use.
Jane: We send out investor updates every
to that mailing list.
And, um, we try not to abuse the relationships, but some of them, like I can specifically even call names like Corey Hines, uh, marketer at their metrics previous. he's working on swipe files at the moment. He's been a fantastic Mar a fantastic marketing advisor, like one of the most hands on realistic marketers.
I know in my environment. And we've got him basically on the team as the advisor. So really love to tap into his wisdom when, um, have questions. So the way we seek, uh, advice, Usually put together an ocean dock, outlying, um, the situ the basics of the business, the situation, the problems, and the questions we have for them.
And then we might run this document by one or two or several, depending on the range of the problem. Um, And try to get like first it's a wonderful prep for a call. And second, it might not even require a call in the end if they just have some, so thoughts and, and written form. So it really helps us to brainstorm the problem before we even seek any help.
Uh, and second, it's a great format because you're not like. you show that you've done your work before asking somebody for their time and input. So that format helps us. Uh, we do it like a few times a year when we hit certain decision making wall or thinking to reassess something most times though we are in the execution mode because nothing is new under the sun most times.
so, yeah, it's not, it's not very often. And just my general approach is not to. Not to tap into any resources more than it is really use that connection than it is necessary. Uh, so It's only the most important situations when I'm really asking for help.
James: So it's interesting. So it's actually the, the information flow is not them asking you regular questions in a, in a more formal structure. It's you sending out? Your questions to help the business at a twoish times a year. Frequency.
Jane: Uh, yeah, something like that. There is also those investor dates. Uh, we have some quick reactions from them. So like we send out to 30 something, people, not just those angels, but also a few other friends. Sometimes they would hit reply and, uh, give us a quick thought. So that helps. Uh, but nothing, nothing major there, but that also can spark some, uh, discussions.
James: Okay. So it's kind of like preparing your thoughts, send them out in structured way, really tapping into advisors skillsets, but not overarching only at certain like key moments in the year.
Jane: Mm. Yeah, but also too much, too many opinions is not a great thing. You really need to be pinpointing like who you are asking for what and when, and, uh, too much communication is not, not always a great thing. If we could, if we would shoot our email list with every single question, uh, got, get 20 answers.
That's that's not a productive pattern for sure.
James: No, but I, I think what's really interesting is that you've taken that fear that people have around investor meddling. If I'm gonna use, if I'm gonna use a, a word that maybe sets with founders into a real positive, it's kind of really structured, really maximizes your
investors and really helps the business.
Jane: Yes. Yes, there is. Um,
Still certain accountability, of course, because we've taken this people's money and, uh, should we, by no means we're planning to, but should we decide to like shut down the company? We would have 22 people to look in the eye and say, we did make it like, sorry. Um, I think for people who take the friends and family round it's, it's similar or even worse.
Because it's their like friends money. We're like half and half friends and, um, people who know less of us, but
James: Mm, how how's that been? So you, you, you said that you had those two fears. One was like being able to look people in the eye. And two was the, sort of the, the sort of outside control. How, how is that looking people in the eye bit felt having taken people's
Jane: Uh, well, Well, in the overall structure of general startup fears, it just plays on nicely along the sales fear, the marketing fear, whatever. Like we're not gonna make it fear. Uh, just general set of fears will live it around.
So it's fine. ,
James: So actually. the pre fundraising fears have not actually manifested post.
Jane: No, I think not. And we have had many conversations since, um, with Benedict about it. And we are really happy that we did go that route this year from 2021 to 2022 has been, a big year for us because we were able to grow the team we have now six people, uh, and.
We both put big resources into making the team feel like a team. We have like certain HR practices. Now we have certain team building practices now and it's, you know, it so feels that we are attracting a certain type of person to be on the team. And that is very like-minded individuals. Uh, and it's, it feels just great.
And I'm, I'm watching Benedict enjoy. And it's amazing that we are just like on the same, uh, line, same vibe, the same work ethic, between the two of us and those people. So it's been, uh, it's been a great journey.
James: Hmm. where, where is the business now then compared to this moment in February
Jane: Well, we've been continually like too, exing our revenue. So every year, so it's the, the, the, this dynamic seems to stand, we don't have any silver bullet for marketing or sales, but. it's definitely much better than it was. We've also tackled the SEO mission since last summer and fundraising was one of the reasons why we could afford it.
SEO was one of those areas where I wasn't an expert and only by hiring a consultancy, we were able to tap into the full potential. Now it feels much better in a great channel for, uh, new leads, which we didn't have before. So that looks like great application of that money. And we have more engineers on the team, which feels amazing, um, so that we can build and ship things Faster.
James: Mm. So actually that, that, that decision to sort. Bring in some extra skills, bring in some extra people rather than doing everything yourself,
Jane: Of course it's it's of course it's better. Like it's, , it's not a question, but you, you need to know how and what exactly you're gonna do. That's uh, that's the angle of the problem.
James: Hmm. And, and it sounds like the sort, the cultural, alignment's been a real thing for you.
Jane: Um, it's, it's great for, for the traction and for the team spirit, for sure. Um, both for the founders and the team themselves.
James: so when you're looking for that cultural alignment, how would you describe your culture?
Jane: So we are a remote only team. Um, we try to respect. Aing communication. Whenever we can try to respect people's schedules times and in a certain sense, we are a team first versus, uh, a. Customer first company. Yes. Sure. Our customer success, uh, does their best to reply.
Um, whenever we can, but in the end, we are not there to make the team miserable because, uh, the pace of the business or certain customers want something done by next Monday, that's not the type of business we are. It's a product business. So we have this, uh, authority to, to do things at our own pace. So we try to make the pace comfortable for everybody.
And, uh, so far it seems that they're doing, uh, how we do things here.
James: Okay. And having, having talked it back through today, is there anything that's sort of res
sort of for you? Talking it.
Jane: over the last couple years, I've read a few more books and adopted a few more like mindsets. And one of the mindsets is that what we lack the most is basically the courage to take the next step, to do things and stuff. And, um, this journey of the last couple years just shows one more time that.
Courage is necessary and you should be, uh, should be more brave to take that next step. Even if something goes wrong and something will go wrong with more or less probability, uh, you will, you will learn and then you can do better the next time.
And if you just don't take the next step, you're gonna just keep doing what you know. And that's not a great trajectory, I guess. That's a lesson learned the bigger lesson.
James: It's I really like that. It's, there's a certain safety in doing what you know, but how can you get a
Jane: Yes. Yes, definitely. And, this whole start of journey compared like both me and Benedict a high value consultants, we used to make much. Money bigger paychecks when we, we did consulting, but it's a never ending, progressing journey that we're on. We've learned so much over the last, uh, five years that it it's not even comparable in terms of personal growth.
Um, for example, this fundraising, um, I'm, I'm a girl. Out of nowhere, uh, being able to collect money from investors for this project means that I will be able to do that for the next project. Um, and that's amazing. That's like a superpower. Um, and, and, uh, we've also. Matured a great deal. More than we would have if we're just consultants, doing things for other people.
Uh, as a consultant, I was so realistic in terms of how things are done and, uh, how resources are distributed and stuff. And man, Now, as a founder, I really don't wanna give any advice to like other companies you can't imagine. Most of companies, they do know what needs to be done, but it's a tale of limited resources.
Like you have this much money this much time and this much manpower that can, uh, put into this and, uh, and a dozen other things that need to be done yesterday. So it's all about priorities.
James: and, and courage, priorities and courage.
Awesome. there's a really nice point to end on. I really like that, that idea of the courage to take the step. it's very powerful. Cause I think a lot often founders have an inkling what they need to do. And interesting. My, my last podcast guest was talking about just this thing about about three or four different things happened in his life, which led him to a decision he to take.
He just didn't want to take it. And eventually he almost had to be pushed, pushed into it.
Jane: Yeah. Um, think the book antifragile, uh, by Nat plays out along those lines pretty well, there is this barbell strategy when you protect what you need the most very hired, but then you go and take some big risks with other decisions, uh, knowing that your base is protected and basically entrepreneurship is about that.
Definitely some risks, but it's not like we're just shooting in the dark. we know that our basis is covered. We know that we have like, um, runway in the bank and now we can experiment more. So onwards
James: Brilliant. Well, best of luck with the, within the next steps of user list. And, uh, I'm gonna steal with all my clients' idea of how to use your, your investors better. This sounds like a very, very smart strategy.
Jane: Thanks so much, James. Um, thanks so much. Glad to be part of this.