Startup Stories Lesson 1 –
How We Got VC
Many of you may know this situation: you think you’ve got a brilliant idea, but you know that you will need a whole lot of money to realize it. This may be the moment you think of presenting your idea to a VC for the first time. This is our story raising 600,000 Euros in four months for nothing more than an idea.
Don’t get us wrong! We’re no heroes and we don’t know anything yet. And we definitely think that building a sustainable business that makes enough revenue to grow naturally is worth at least as much as convincing an investor of your idea. But for us the “VC approach” was the right decision. Now we have the luxury to focus on the development of our product. We have the chance to realize our vision of great productivity software.
And we are just so happy about it that we want to help you, just like a lot of people out there helped us in the last months. We strongly believe in contribution and sharing experiences. We want to tell you something real about us and maybe you can learn something. If not, then I hope it will at least entertain you. That is why we tell you our story.
STEP 1: DOES YOUR BUSINESS PLAN REALLY PLAN YOUR BUSINESS?
One of the first things that come to mind when thinking of venture capital is the business plan. Oh yes, the holy and omnipresent business plan. Don’t get me wrong, we wrote one too. It is about 30 pages long and contains 8,800 words and some nice pictures. But this was not the first thing we did to find an investor. Actually, it was the LAST thing. Because in most cases you won’t be able to write down all the things that are necessary, unless your business is based on some simple reselling calculations. But even if you’re planning an e-commerce business, it’s not primarily about the plan, it’s about the idea behind it.
We found a pretty good strategy for us to shape the idea of wunderkit just to the point where every one of us was happy about the result: we simply talked about it. We talked for months and not only we talked about it to each other, but to anyone we knew. I told the concept of wunderkit to my mom and my dad, to my sister, to my grandmother and to my friends. The best ideas came to me, when I talked to people, who just didn’t understand the need of wunderkit. They came up with questions I never had in mind, and so they were something like the perfect test audience for me. So before you write down your business plan, you should ask yourself whether your mother would understand it.
I see, I see! There are situations, when asking your family and friends might not be the best idea. So I think it’s OK that you built this quantum computer thing of yours without asking mommy.
STEP 2: SEND ME AN ANGEL… VIA XING
So we had the idea and we knew that it would be a real innovation, if we could realize it. We started to search for an investor. So how the hell do you get in contact with a real VC? We literally had no idea, so we just made a list of every single German investment group we knew. And then we send out some mails. That’s right, we just sent a bunch of mails in the hope that one of them would like our idea. And some of them really did. But Germans are rather careful when it comes to money, so they told us that they liked the idea but they won’t give any money, unless we can show a first prototype.
We were confused. Why would we show them a prototype? Didn’t they read the business plan? Didn’t they get the idea? If we could present a prototype to them, we wouldn’t need their money at all! That’s not what we understood by “venture” capital. But we were lucky, because, in the end, our search for an investor led us to something much better… an angel!
Well, not a real angel, but two business angels, who not only liked our idea, but had pretty much the same one for years. They just didn’t know a good team to realize the project with. That’s were we came up, it was the perfect match. And the best thing: we found them on Xing the German counterpart to LinkedIn, just because Christian dropped the line “Who wants to invest in the next-gen business tool?”. It took us about three days to convince them to invest 100,000 € in 6 Wunderkinder. And, by the way, no one was interested in our business plan in the first place.
STEP 3: SHOW ME THAT PROTOTYPE!
We knew that the money wouldn’t last forever and that we would need more in order to complete the project. So our angels spread their wings and blew up some dust for us. With them on our side, we caught some attention for our project. That was the time when we decided to develop that damn prototype they wanted so badly.
It turned out not to be the baddest idea. In fact, it was the perfect strategy for us. We could test our philosophy of a simple and beautiful interface design, we could test the development and we could test our marketing approach. But most of all, we could really see our users feedback. Well, your feedback!
So we sat down and created Wunderlist, our easy-to-use task manager and within the first seven weeks the tool was downloaded over 180,000 times. We now have over 60,000 registered users and a fan base of tens of thousands of people. The High-Tech Gründerfonds (High-Tech Founders Funds) liked the idea of wunderkit even months before, but I think it was not least the success of this little “prototype” that made them invest their money (500,000 Euros) in our idea.
STEP 4: BE A FAN!
Well, actually this should be step number one. Because every idea, every business plan and every strategy is worthless, if you’re not totally in love with what you do every day. You may have the perfect idea on how to build up a successful online video course platform for soon-to-be moms, but as long as you are the greatest George Lucas fan in the world, you should think about this seven volume Star Wars encyclopedia you began to write when you were eleven.
Because that’s why we built wunderkit. We are so in love with usability and productive business tools, so in love with beautiful and simple interface designs, that we think we are the only team in the world that should build this thing. And this is why our business angels and the High-Tech Gründerfonds even thought about giving their hard-earned money to a bunch of newbies like us. It’s all about love ;)