For a few years, Buffer has been known for making social media management tools that let you schedule, automate, and analyze social media updates.
Today Buffer might be better known for how much it reveals about its own salaries, revenues, and key metrics, how much money it has in the bank--and now, its latest round of funding. (I've written about why Buffer chose to build a transparent company, as well as why it chose to publish employee salaries and compensation plans.)
"Raising money is oftentimes something that's very secretive," co-founder Leo Widrich told me. "There is a lot of negotiation involved around how you can ask for the biggest valuation and how you can play one investor against the other.
"That's been a large driver for us to doing this round differently. We wanted to make it transparent, be completely open about our intentions, and not trick anyone. We're very excited that we could put absolutely every detail in writing that has come into making this fundraising decision."
Buffer started generating revenue in its very first week, focusing on building a valuable product before raising initial funding. The goal was to retain as much equity and control as possible. And so far, it's achieved that goal, hitting $4.6 million in annual revenues after raising only $450K in funding--and it's been profitable for the past six months and has built a bank balance of more than $1 million.
Yet it's also a risky approach with at least a few possible downsides.
"This round of financing isn't closed yet, everything can still fall through, and we're still doing due diligence with our lawyers," Leo says. "That's one possible risk, but it's also the appeal of doing it this way. We don't want to just present a done deal to the public. We want to show what it's like when you're not fully done, when you're still sweating and uncertain about the outcome. We want to really lift the curtains and let people take a peek at what it's like when you're a startup raising money."
As of today, the full $3.5 million Buffer initially sought is committed. Investors like Collaborative Fund, Red Swan, and VegasTechFund are onboard, along with a number of angel investors and public AngelList syndicates.
And that's where you come in--not to invest but to get an insider's view of how funding works.
As Leo says, "We hope we might be able to inspire other startups and the business world in general that there's a different path out there to running a company--one that's culture-driven and transparent and open.
"We also want to help other startups that are raising or will someday try to raise money. There's very little available out there, and we hope we can help people think through things from all angles when they're considering raising money for their companies."
If that's you, and you like learning from real-world examples instead of only from the hypothetical, check these out:
And then consider how open and transparent you'd like your company to be. It could be a great business strategy; the day Buffer published its transparent funding blog post it also had the most new-user signups in its history.
Transparency might not just be something your company can say it values--it might also be something that makes your company more valuable.