A Birmingham, Alabama-based social-media management company called Influencer (INFLCR) has recently completed a $1 million post-revenue seed round and added 2 members to its leadership team. It was a "60-day fundraising sprint" per founder and CEO Jim Cavale, who was able to convince Birmingham entrepreneurs to invest in the round, with Daxko founder Tom Patterson and Fleetio CFO Jonathan Sides as lead investors.
INFLCR was only founded in late July 2017, as a software to help sports teams, leagues, and athletes store and track the audience performance of their content assets by distributing them to coaches, players, alumni, and recruits, who are then able to share them on their personal social-media accounts. The main concept is people don't follow brands on social -- they follow other people.
I spoke with Cavale coming off the recent raise to learn more about some things he has learned in the early goings of his company.
Raising money can take up more time than focusing on growth of the company.
"The thing about raising money is that it can become its own business, its own job, and it can really hurt your current business," says Cavale. "It's tough to still do the day-to-day."
That is a big reason why Cavale will use some of his new resources to build his team. The fundraising rarely stops in the early years of growing a startup, and the founder's attention is often taken away from the core business to traveling from meeting-to-meeting to bring on new investors.
There is value to waiting out investment until a startup has actual revenue.
"I was fortunate to start INFLCR coming off of an exit I had with a national fitness brand (Iron Tribe) I had previously led as president," explains Cavale. "I was able to self-fund INFLCR's initial launch along with some limited capital from some close friends."
By self-funding, Cavale could force INFLCR to build its own track record with its product, clients and revenues, and ultimately raise a seed round at what he believes to be a fair valuation as opposed to giving up a large piece of his new company at a discount, which is often an issue with raising money pre-revenue.
Manage early expectations so that you actually may be able to exceed benchmarks.
"When we launched in July 2017, we set out to sign a new college athletics client to an annual subscription (which is priced per team sport) in each month of our first year as a business," says Cavale. "I felt good about the revenues this goal could produce, and even better about the product-market fit and client success fruit that this goal could bear."
In the first six months, Cavale beat his goal with seven college athletics clients and more than $200,000 in annual recurring revenue (ARR), headlined by Southeastern Conference powers like the University of Kentucky, Auburn University, and the University of South Carolina.