When I was building gtrot in 2010, I read TechCrunch funding announcements like they were gospel. There were numerous companies that made it and we wanted to be one of the. So when we did finally close our round, a funding announcement in TechCrunch was high on the wishlist.
We hired a PR firm, talked to a number of reporters and held our embargo until 9am to grab a prime spot for East Coast and West Coast readers. We were so excited about the big announcement.
Looking back, man did we get it wrong.
We viewed getting published in a tech publication as arriving and external proof that “we are a legit -company- startup.” We thought that the launch announcement would serve as a powerful user acquisition channel that would drive thousands of new customers. We also assumed that by adding that TechCrunch logo onto our website homepage would further convince new customers to give our product a shot. We tied up a lot of energy, time and excitement to something that wasn’t a game-changer for our business.
Thankfully, there are companies who’ve avoided these mistakes of ego and unrealistic expectations. Last week, VHX announced their fundraising the right way. (PS - Welcome to the USV Network!)
Let’s take a closer look at what they did well:
Write your own announcement
Any journalist who is turning out 10-20 articles a day is bound to miss the subtleties of your product in your funding announcement. No matter how fantastic your press release is, there will be errors. Especially if you’re a lesser known company, don’t be at the mercy of the press to get the story right. Like VHX, write the news on your own blog in your own words. [http://blog.vhx.tv/post/59682398473/vhxusv]
You can still publicize your announcement and work with journalists, but those should be in addition to an announcement on your site.
Share your story with potential customers
Wait, people didn’t know what your app called Duunk does? Doesn’t the title give away that it’s a social network for people who love cookies and milk?! These people signed up to receive updates from you on your RockLaunch page just six months ago and they still don’t remember?
If you’re a curious, and perhaps optimistic, person like me, you likely sign up for a number of ‘keep me updated’ emails for new companies. It surprises me the number of times that I get a notification from these companies that the product is ready and it has no context into what the company does. My invite is ready. Wait, why should I care again?
VHX spells out what they’ve accomplished to date:
“In the last year, VHX has grown from 2 people and a comedy special into an 8-person team with a solid software platform and dozens of great releases. The filmmakers, distributors, studios, and publishers we’ve worked with have helped shape two simple ideas about the future of premium video distribution:
Creators want well-designed websites, control of their own content, and a direct relationship with their audience.
Consumers want to watch high-quality videos that are restriction-free and available everywhere, and are happy to pay for it.”
Eureka! I now understand what this company does and I’m clear on why they are doing what they’re doing.
Drive value back to your business
When I see a friend’s announcement on a tech blog or publication, I’m guilty of giving the old Facebook Like and a “Congrats!” in the comments. While I love a good bit of encouragement, this doesn’t do a dang thing for helping their business.
What do all growing companies need?
Fundraising - Well, that what the announcements for so you’ve done something right.
Talent - If you aren’t looking for smart people after raising money then you’re doing something wrong.
Customers - People want to know how you can help them, if you can, make it easy for them to become your customer or tell their network to become a customer.
Now I’ve (finally) learned that it’s much harder to get what you want unless you ask for it. And don’t just hint that you have a jobs page or are looking for people to try out the product, make it stupid easy for people to sign up.
Now let’s see how VHX tackled this one:
We are looking for beta testers: Filmmakers, distributors, publishers, educators, and moving-picture-creators who want to put the new platform to use. If you’re ready to sell work, we can power your website.
We are looking for new team members: Great people who love videos and are passionate about creating for creators. We are building a watching experience that’s better than Netflix, keeps artists and fans as close as Kickstarter, and empowers publishers as much as Tumblr did for us.
Most importantly, we have free stickers for you: Fill out this form and we’ll put some in the mail.
Simple. Easy. To the point. Now, you’re all clear on where you can help? Get to it!
Manage your messengers
Have you ever received an email, DM or @ message from an entrepreneurial friend or acquaintance that asks you to RT or share their post ASAP? Being the loyal friend that you are I’m sure it’s very likely you stopped what you were doing and went straight to Twitter, Facebook, Gmail or Tumblr to spread the word. I applaud you! For the entrepreneur, I’ve got some beef.
If you know that you have a launch coming up why do you only give loyal connections a 5 minute warning? If this request for promotion is the first time that you’ve reached out to these people since you started your company, that’s a missed opportunity.
You should establish a regular cadence with your supporters. Whether you use a public tumblr that is easy to follow or create a secret google group that you invite only high potentials to (at gtrot we called it our insiders list), create some way to communicate with your loyal customers and supporters before you go to launch. Then, when you’re ready to launch, let this group know first. Let your messengers know what you need and when you need it.
Quick checklist for your fundraising announcement:
- Write your own announcement on your own website.
- Include some notes about what you’ve done and what you will do.
- Drive value back to your business by asking for what you need.
- Manage your messengers in advance to help spread the word.
Thanks to VHX for letting me pick apart their announcement and for providing a solid example of how to do things right. Now to put what I learned into practice here…
I’ve worked as an entrepreneur and as a VC. Which has helped me understand what it takes to start a company and what it takes to scale one. I started this blog to help share the stories and advice about scaling a startup that often only gets shared in smaller settings or informal conversations.
In order to make the information more relevant to you. I’m interested in learning more about the challenges you are currently facing. Ask a question and I will do my best to address it on this blog.
If you enjoyed this post and want to learn more about how to successfully scale a company after raising financing, I’d appreciate your support my talk at SXSW in the spring. Sign in to vote for: Cha Ching! You Closed a Round, Now What?
If you have other examples of great fundraising announcements or would just like to share yours for a critique, please add it to the comments below.