"Money money money money MONEY. " You all know the lyrics to that O'Jays song. Well, friends, I know the song and the dance. Getting HappyFamily off the ground wasn't easy, especially when it came to raising start-up and growth capital. What follows is my fundraising saga (part three of four parts).
Within eight months of launching HappyFamily, I had gotten a VC offer, declined it, been loaned $20,000, and found myself a new partner. In 2006, I was also able to raise money from family, friends, and other investors, but it wasn't enough. Eventually we completed the down round where we ultimately raised $3 million. We used that money to fund our cutting edge innovation: baby food in a pouch; and in 2009, we launched our pouches. For the first time ever, we had a home run. The pouches were flying off the shelves and were proving to be the true alternative to the archaic baby food jar.
This was very exciting! But, you guessed it, we needed more money to sustain production and encourage growth. So, at the end of 2009 and into 2010, we had another round of fundraising. At this point, I had gotten very good at this. Yes, fundraising took up at least 40% of my time (don't forget: in addition to fundraising, I was also still CEO and doing so many other things to keep the business going: marketing, branding, innovating, etc.).
On the day I went into labor with Zane, I was sending out pro ratas, literally, just before we left for the hospital. I can still hear Joe yelling at me to get off of the computer so we can go have a baby. But, it worked! We raised more money, we kept on growing, and we felt good. We had truly innovated the baby space. And we were beginning to get noticed--by different big guys this time.
One of those different big guys was American Express. Around the time the pouches were about to launch, Happy Family was chosen as one of five finalists for NBC Universal/American Express's Shine-A-Light competition for the most inspiring small business in America. Eight months later, American Express contacted us to do a follow-up 90-second web documentary to highlight a socially responsible small business on their website. We filmed for a couple of days over the summer of 2010 with an expected internet release sometime in the fall.
Some of the other big guys were--surprise!--private equity funds. But this time around, despite my negative experience a few years earlier, I was now open to working with one of them. The success of pouches had propelled the business into a new echelon of fundraising because the amounts we now needed to raise were so much higher. Raising multi-millions was far different than raising hundreds of thousands, so we needed to find investors who were willing to write bigger checks. We were now in the realm of what many funds exist to do.
So, I spent the summer of 2010 doing the dance with a few private equity firms. We needed $8 million, and I thought that was way over my head in terms of my personal resources and my network. (Our investor base was loyal and had grown over the years, but it was still a lot to ask post-recession).
My plan was to have a good choice by the fall, and at the end of the summer, I went to South Africa to receive an award and turned it into a 10-day vacation with my parents. As I've mentioned in previous articles, my father grew up in Africa, and I wanted to show him that Happy was making it--even in Africa--because that made him happy.
The first week of the trip was normal. We went to the award ceremony in Cape Town and then headed to Kruger for a safari. Everyone was having a great time. The trip was exactly what I wanted it to be.
The second week, my dad had an unexpected heart attack in the middle of the bush.
We didn't know what to do. After three misdiagnoses, we flew to Abu Dhabi, where at least the doctors were good, for which I was grateful. But, we were stuck there for weeks and weeks. I still had a company to run: a private equity fund to choose and begin due diligence with (my attorney was already collecting term sheets from various venture funds) and new products to launch (Happy Munchies were coming up). Plus, we had Zane with us--then only 8 months old. It was just so hard to be away. My 10-day vacation had turned into a 4-week nightmare.
Then, two things happened:
First, our pouches rolled out into Target when I was in Africa. Within a couple of weeks, they were ranking 4th, 5th, and 6th in all of the baby items in Target.
Second, American Express called me to do voice over work for what they were now calling a commercial. A commercial. This was originally just going to be a 90-second spot on their website, and now they are telling me that they need the voice-over ASAP so they can put $50 million in media support behind the commercial. (I nearly had a heart attack this time).
My dad recovered. We got home. The commercial started playing on prime time TV in November of 2010. We sent out pro ratas, and this time, we raised $8 million in three weeks. All private investors. No venture funds. We were back to being happy again.