A Little Story About the Agony of Fundraising With A Happy End ;-)

When I met M. late in 2017, his startup was running out of money and he was exhausted by fundraising. He spoke at every single conference and pitched weekly at different investor events, cold called, asked for introductions … and nothing worked.

He approached me a few months ago not because he needed compliance advice, but because he thought I might know where startups get funding these days… He was hoping to raise $3-5 million and it was tough. Many founders told me, that it’s very easy to raise $100-300k of seed funding and it also gets easier when you need something around $20-50 million and you are ready to scale, but raising 2-3-5 million is the worst.

I knew about a few investors who had recently funded FinTechs and had a good understanding of their level of maturity, strengths and weaknesses. M.’s startup was not bad at all, and startups who actually got funding were probably less compliant and potentially accumulated less know-how and less traction.

I wanted to help and since almost the only way I know how to help is to review and edit documents, it’s what I offered. We had lunch together and looked at the documents. The story projected by M’s pitch deck, had no examples of progress. It’s understandable: they started running out of funds, decreased advertising and cut all unnecessary expenses, their volumes and customer growth metrics stalled.

I have reviewed enough license applications and business plans and financial projections in my life to know that lack of progress is a HUGE problem. I asked M. whether they made any measurable progress in other areas, whether there were any metrics that improved… He did not have an answer at first, but then he pointed out to 3 things:

• They up-levelled their app experience, added new features and improved the speed of certain technical processes. It was possible to compare “before” and “after” at the technical level.
• Because of all the buzz around fundraising and conferencing, their social media followership and app downloads grew significantly. Those were not paying customers, they did not convert yet, but there was a clear steady growth of community engagement and there were some interesting details about emerging geographic concentration.
• After implementing compliance automation tools, they reduced manual efforts per customer on compliance processes. Essentially, they were able to do more compliance checks with the same resources per customer, and in a shorter time frame.

Last week I got a happy call from M – they closed the funding round. It’s hard to say, whether or not my contribution made a difference, but M. says it did. I’m so happy for him and his company!!!