Note: originally published at Fredo Pareto.
On Sunday, September 3, 1967, Sweden changed from driving on the left to driving on the right. This is what happened.
My email to my team last Thursday:
I landed in San Francisco tonight, checked into a hotel, and walked two blocks to dinner. I sat down, and I heard the table next to me discussing a topic largely unfamiliar to me as a Triangle founder: they were VCs talking about doing actual deals.
I butted in and told them how spot on it was–as a Southeast founder with a certain idea of how much better the West Coast is for seed capital–that I encountered this at my first dinner in SF, off the plane for only about an hour. They laughed and concurred. Turns out one was a VC from NYC who invests in fintech. He liked my pitch, wrote his email on the back of a receipt, handed it to me on his way out, and told me to email him.
I’m here to meet with the CEO of a venture-backed startup that I think would be stronger in partnership with CellBreaker (Fixed). He invited me to his office tomorrow, but he doesn’t know what I’m thinking.
But now you’ll know what I’m thinking.
Here it is:
Fixed fights parking tickets. They’re model isn’t scalable without sufficient manpower and local parking code knowledge, and their space isn’t as lucrative as other parallel spaces.
Plus, they just endured a down round of investment, and it appears to me that their ship is sinking. I think the Fixed team and their investor connections would be a really powerful boost to CellBreaker. In return, we could offer Fixed a way to stay in the legal tech space because we’re already experts at the far more lucrative consumer service contracts space. Their team and connections + our technology and domain expertise would be dangerous. That’s what I’m here to suggest.
I meet him tomorrow midday.
Every Pitch Is Far Fetched
The sub-headline to Joshua Brown‘s recent Fortune article: “How would the judges on the reality show respond to pitches from some of the most successful entrepreneurs in recent history when they were just starting out?” The show referenced is the Shark Tank.
In response to the article, Droparoo founder, Albert Chou, nailed it: “Every pitch is far fetched until it is reality. That is why seed investing is much harder than a series A. At A time, usually you have the data to prove it.”
The Guy Who Pitched the Traffic Change
I have no doubt that the guy responsible for changing the Swedish traffic pattern (pictured above), the guy who pitched it without any supporting data, got his ass handed to him a few times–before and after the change. But then the data poured in, and his pitch seemed less and less far fetched. By golly, it worked.
What We’ve Learned Pitching CellBreaker
That’s where CellBreaker is at: pitching with data insufficient to rebut detractors. A marketplace for consumer services in which consumers, not providers, are in charge? It seems far fetched. I know–which is why we spend our resources on:
- Bold but small, incremental implementations.
- Testing those implementations.
- Collecting data from those tests.
With over a year and a half of tests behind us, including a 2014 pilot of a freemium CellBreaker sales model, we’re nearing the point of having sufficient data to convince and compel investors. But we’re not there yet, and most of the investors we’ve pitched to in NC have not been optimistic about our business.
Reminiscent of George Orwell's Animal Farm--"All animals are created equal, but some animals are more equal than others."--we recognize that not all seed investors are equally tolerant of seed-stage risks, and the division between the tolerant and intolerant seems to adhere closely to geography, West Coast versus East Coast.
Why I Went to California?
This is why I went to SF, and this is why meeting that VC at dinner was so refreshing.
Raising Seed Investment in North Carolina
Perhaps it’s true that CA seed investment is easier to obtain than NC seed investment. But we’re trying to collect enough data to validate and thereby mitigate the risks of our model without having to leave NC for CA for good. Like many other bootstrapping NC startups trying to raise seed capital, I suspect, we think we’re almost there, but it’s ultimately up to NC investors to make that call.
Startups need capital to survive, and nowhere is this more painfully apparent than the seed stage. That's why God created seed-stage investors: to write seed-stage checks.
So, uh, if you're a seed-stage investor who doesn't actually write seed-stage checks, then you should probably consider updating your LinkedIn profile.