BabyQuip launched our latest round on SeedInvest late last month. I thought it would be helpful to potential investors and also other founders to share some of the challenges of growing a startup, raising capital (especially as a female founder), and why I chose to go the equity crowdfunding route at this stage.
Growing a startup business is like navigating through an obstacle course. The first phase is all hope and grit: Do we have product market fit? Will our service be more than minimally viable? For marketplace businesses it can be even more difficult because we have to both recruit suppliers and entice customers.
When we started BabyQuip in mid-2016 we were only armed with the belief, based mostly on early work in Santa Fe (by co-founder Kerri Couillard) and my Airbnb experience (as a Superhost), that there was a large and underserved market for baby gear rentals for traveling families. We had very little money to expand and create momentum. We focused on being able to tell a good story, mostly around how grateful and happy parents were to use our service. We joined the Startx accelerator, which provided some great advice, new connections, and our first exposure to potential investors.
As to funding, I was able to invest some of my own money, forgo a salary (in part due to my Airbnb business), as well as tap into a network of potential angel investors and friends. (So many other start-up don’t really get past this stage because they don’t have the advantages we enjoyed).
The next stage is to try to grow enough and learn enough to get more capital at better than a bare-bones valuation. For BabyQuip this stage was full of ups and downs. Highlights included joining an accelerator (Quake Capital), getting our first institutional investor (Startup Capital Ventures), and rapid expansion of our supplier base who we call Quality Providers (these are the independent contractors — mostly moms — who deliver, setup and pickup the baby gear that they own). As we expanded our supply, we reached more and more parents who told us we “saved their vacation.”
In addition to bringing on new team members, we said good-bye to some of the people who were along at the beginning, including one of our founders. We also changed our name from Babierge to BabyQuip, which, while absolutely necessary, was a bit of a shock to the system.
We dug in, rebuilding our SEO, optimizing lead gen, forming key partnerships, and improving the platform (for both Customers and Providers).
We’re now in over 400 markets with nearly 600 Quality Providers. We’ve served over 30,000 orders and have earned a world class 82 Net Promoter Score! (According to Survey Monkey the average is 41). Our Providers are making good money (bringing home on average over $500 per month) and they find the work gratifying too.
Raising money still took an inordinate amount of time and effort. Many Silicon Valley investors are focused only on the companies that are likely to be the next Airbnb or Uber. (A large part of this has to do with how they are funded and the challenges of deploying very large amounts of capital). Some don’t fully get family or female-oriented services. And of course you can’t ignore the fact that women only raise just over 2% of all venture capital funds. Seriously.
Overall I’ve had a great career as an entrepreneur. I’ve had a tremendous career if you add the word “female” to “entrepreneur” because it is much harder to be a woman and start-up founder. It’s more difficult to get investor attention, raise capital and even to build a team. Over the years, I’ve encountered a range of other experiences and biases that also got in the way. For example, one potential investor called me “abrasive” when I was maybe just “assertive” in going after the capital.
Nonetheless, I filled in a bunch of boxes on my entrepreneurs Bingo card! Here’s a rundown of my story:
- Match.com: It was just about 25 years ago when I joined the founding team at Electric Classifieds (parent company) and launched Match.com. My work in bringing women to online dating was pivotal to our success as recounted in the book The Player’s Ball (see Atlantic excerpt here). We sold Match.com for way too little in 1998, but wow, we not only built a brand but a whole new category. And many great lessons were learned.
- Women.com: I joined as VP of Marketing in 1998 and focused on building traffic to the site as well as supporting our advertising platform. Believe it or not, in 1999 there were only a few sites dedicated to the women’s market (the main competitor was iVillage, remember?). We joined forces with Hearst magazines (including GoodHousekeeping, Cosmopolitan and Redbook) and were a Top 25 website in 1999. Women.com IPO’d in late 1999, but by the time the shares could be sold we were in the midst of the dot.com crash.
- BlueLight.com: I joined BlueLight.com, a joint venture with Kmart, in late 1999 . My team launched the fastest growing Free ISP service with the goal to bring Kmart shoppers online. By 2001 the heady days of the dot.com era crashed, taking Bluelight with it.
- TrustArc (formerly TRUSTe): In 2001, I joined TRUSTe as Executive Director, at the time an insufficiently funded non-profit industry association. I spent over 10 years at this company where we became the leading authority on internet privacy. In 2008, I converted it from non-profit to a venture-backed for-profit company, raising over $10M from Accel. TrustArc continues to be the leading privacy trustmark and compliance provider and recently announced a major investment and new acquisition to help it continue to dominate the market for online privacy compliance.
- BabyQuip: As you can see, BabyQuip is my 5th startup! It reminds me of Match.com, not only because it’s so early stage, but because we are building a new category and like Match.com, people are so grateful for our service.
Fast forward to the present…now we are in a new stage, call it “late seed” or “pre A”. (The goal posts keep shifting and these labels are almost meaningless. A late stage “seed raise” used to be called an ‘A’ round. Now most startups raise close to $5M before they raise an ‘A’ round which now is typically well over $5M.)
Its been 3 ½ years since we were founded and we’ve raised nearly $2.75M. This long stage has allowed us to build the business more efficiently and more sustainably. As BabyQuip enters this next stage, which is all about scaling, we need more growth capital. This SeedInvest round will get us into 2021, help us expand into new markets, test some new product and service ideas, build out our team and get to ‘A’ round metrics and even, profitability.
I started looking at crowd-funding capital raising a few years ago when I made my own angel investment in Portfolia. It made sense to me to make it viable for smaller investors, especially women, to get in on start-up investing. Some in the VC community scoff at this kind of fund-raising, but the more I learned about it the more intrigued I became. Some large and well known companies are using these crowd equity platforms to top off their ‘A’ rounds or even raise very large ‘B’ rounds. Until recently, I didn’t personally know many entrepreneurs doing this, especially female entrepreneurs like myself, but well, I’ve always been an early adopter.
The most compelling reason to do this kind of fundraising is that women entrepreneurs and their products/services are more successful raising on crowd-funding platforms than with traditional venture capital. Is it because more women can afford the lower investment amount? ($5000 for BabyQuip’s raise.) Is it because it is “more democratic” with less bias? Or simply because the opportunity reaches more potential investors?
- Many of our customers (and even our Quality Providers) have indicated an interest in investing because they love our service and believe in what we’re doing.
- Seedinvest is aggressively marketing the opportunity which is getting BabyQuip in front of new investors, potential customers and partners who we otherwise might not get in front of. It’s a terrific brand building exercise too.
- Crowd equity fundraising does not “Crowd out” traditional VC investments for the future. Plenty of companies are raising from both channels.
What are the costs to the Startup? Of course there are costs, including the commission to the platform and the marketing of the offering takes significant time and effort.
What are the benefits to the investors? Investors can more easily diversify across startups because of the lower investment amount. SeedInvest does extensive due diligence on the company, deal and terms. And investors can vote with their money to support the companies they most believe in.
We are so proud of what we have done to grow BabyQuip into the market leader it is today, and are excited to give you the opportunity to invest (as little as $5k) into our business alongside our current investors.
Here’s a link to learn more & invest. Please pass along to anyone you know who may be interested! https://www.seedinvest.com/babyquip
BabyQuip is offering securities under Rule 506(c) of Regulation D through SI Securities. Additional information may be obtained from: https://www.seedinvest.com/babyquip,
BabyQuip is offering investor perks starting at $7,500. Perks include swag, BabyQuip discounts, an invite to an annual female founder investor dinner, and even a 4 night getaway. Check out the perks here.