How Spreedly Raised $300K in 10 Days on AngelList
A Must-Read for Startups Outside the Valley
BY JOE PROCOPIO
Filed Under: NEWS: Startups
The last time Spreedly CEO Justin Benson and I spent any significant time together was in the back of Tyler's in early March talking about the company's pivot and seed raise over a couple of dark beers.
I knew he'd be going out for another round in June, and that we'd touch base then, but I never thought he'd actually get the deal done before we had a chance to talk. As it turns out, Spreedly just closed a $300K round that went from introduction via AngelList to money transfer in 10 days.
You should keep in mind that this is after years of building the business, solid customer growth, and months of preparation for the raise, but here's how it went down.
Once Spreedly got the initial seed, which happened in December 2012, they were able to complete their transformation to their core product, highly-secured and multi-gateway credit card storage as a service. They went live March 1st, which coincided with the last article I wrote.
They had maintained a profile on AngelList for about 12 months, and just as they were rolling out the new product, they got a call from AngelList, who were interested in featuring Spreedly -- basically they put you on the home page and mail your info out to about 1000 investors, with the return expected to be 10-20 or more phone calls.
Benson thinks that AngelList is interested in proving their model beyond Valley companies getting invested in by Valley angels, and are taking the model out of the traditional hotspots to validate their story about global reach.
Plus, the payments space is hot, and it happened to be that Spreedly is in that space. Between Square, Stripe, Paypal, Google Wallet, even BitCoin, there's a lot of innovation going on in payments, and everyone is trying to jump into the space.
But... that call from AngelList in early March coincided with the launch of the new product. So Spreedly and AngelList agreed to come back in 100 days and take a look at traction and some proof points. If all went well, they'd do the feature run then.
Spreedly rocked that 100 days, so in early June Benson was getting ready to follow up with AngelList about the feature -- updating the metrics, enhancing the profile -- and as he was doing this, an investor starting following them.
This wasn't just any investor. E-Merge, out of Belgium, did early stage, and in fact had done 30+ investments. They were in a payment company in Europe called Ogone, that had just been acquired for $400+ million in March. They were also an investor in Cabify, the Uber of the Latin American world. Cabify was a solid Spreedly customer, so a good reference was there for the taking.
Benson emailed E-Merge's Laurent Drion on a Friday, and within 2-3 hours got an email back, requesting a Skype on Saturday at 7:30 in the morning, afternoon Belgium time.
That went well and Drion emailed shortly after requesting a second Skype, this time with Spreedly CTO Nathaniel Talbott, for Sunday.
That also went well, and at the end of that call, Drion mentioned they had already gotten a glowing reference from Cabify, and they were ready.
That's "ready" as in they wanted to take the whole round and do it as soon as possible. While Benson and Talbott aimed to contain their excitement, they took the following week to put together the standard docs, which were ready by Friday. The following Monday, E-Merge signed and wired the money.
10 days from start to finish.
Spreedly will put the money towards awareness of the new product - for marketing and improving discoverability. Like every startup, they realize they're awareness-challenged, so this will help them get out to the shows and events in the payments space.
There's one other thing they're excited about, with an announcement in a September time-frame. And though they won't really be ratcheting up head count, their current team of five will be heads down on that project.
Oh, and Benson is about to leave on his first vacation in years. I'd say with a June like he's having so far, it's well-deserved.
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Last week, I was in lurking in the back of a room (which is usually where you'll find me), listening to a rather successful entrepreneur give a talk to a bunch of young entrepreneurs, most of whom were students. At one point, he made this distinction.
Well, one thing to note is there was acquisition interest almost from the beginning. I'm a working entrepreneur, and ExitEvent was something I started because I was convinced it needed to exist.
As a startup founder, you're going to get inundated with advice for building and running your company. It's inevitable. You'll be able to tune out 90% of it, but it's going to seep in, whether it's from your advisors, your peers, or your grandmother.
Look, I'm not saying that you're going to walk into every ExitEvent Startup Social and find one table with those kinds of folks sitting at it. But I will say this. If you let the snow keep you home Tuesday night, you missed that chance.