How I Got Lost Searching for Investors!
Read the previous part of my story about my product being on store shelves for the first time.
I had bootstrapped my product to being for sale on shelves in over a 100 retail stores!
My product was a miniature lighting device that could illuminate any surface it was attached to.
The stores carrying my product consisted of a mix of Ace Hardware, Fred Meyer (Wal-Mart like big box chain), and Duane Reade pharmacies (now owned by Walgreens).
But, I needed to boost sales per store, and scale up the number of stores too.
So, like many inexperienced entrepreneurs, I convinced myself I needed money to expand my product line and launch a marketing campaign.
But this required more money than I could fund myself, so I decided to raise outside capital.
How hard could it be, especially since my product was already on the market?
I just needed what I thought was a low-risk investment to scale my business.
Like anything new, I soon learned this was a lot harder than I thought it would be!
Ever done that before?
Seeking outside funding consumed all of my focus since I was still a one person operation.
I’m also a very introverted person, so this level of networking was exhausting for me.
I connected with everyone I could on Linkedin, hoping to find an angel investor.
But I soon learned the cold, hard truth…
Rich people don’t give away money to random people on the internet:)
Shocking, I know!
You almost always need a personal connection to them.
So next I decided to pitch my product to a local angel investors group.
Angels are just rich people who invest in very early startups. They tend to have groups in most large cities.
For me, that was Honolulu, because we were living in Hawaii at that time.
The pitch event was held in a beautiful setting next to the ocean, but I was too nervous to enjoy it.
This was the first time I had ever pitched my product (or anything, really) to a room full of people.
I had presented at lots of meetings as a chip designer at Texas Instruments, but nothing like this.
Engineers never intimidate me since I feel at home with them, but this room full of rich investors scared the hell out of me.
Honestly, I just wanted it to be over.
I was so nervous and sweaty as I looked out at the room full of aloha shirts with the people in them judging me and my product.
I hated doing this type of thing, but I was determined to do anything to succeed!
The presentation itself is mostly a blur, just like my presentation to Blockbuster Video executives a year earlier.
Ultimately, the angel investors were impressed I’d made it so far with my product. But they weren’t interested because I wasn’t yet profitable.
Total investment = ZERO. Time wasted = TOO MUCH.
It was a BIG FAT failure, and I felt so stuck.
But soon after, a sales rep who was pitching my product to retailers told me he was friends with the granddaughter of Rice-a-Roni’s founder.
Hmm. Okay, that’s interesting, but I wondered what his point was?
Then, he tells me he’s been talking with her about my product and the progress I’ve made.
Apparently, she was impressed.
Now I’m really interested!
More accurately, I became a little obsessed with Rice-a-Roni, thinking this random woman may be the savior I needed.
Although I hadn’t eaten it since I was a kid, I quickly bought a couple boxes, and read about how her grandfather founded the company many years ago.
But, I shouldn’t have been focused on Rice-a-Roni, or pitching to angel investor groups.
Because fundraising is a full-time job and it completely distracts you from running and improving your business.
I spent about 9 months focused on trying to convince investors to give me money.
Ultimately, all I got from Rice-a-Roni was a couple boxes of rice, and the heir to the fortune never opened her wallet.
She felt I needed an investor with knowledge in my particular market, which she didn’t have.
Turns out, most investors want to be involved, and to ideally use their expertise and connections to give the startup a boost.
Honestly, I really needed both money and knowledge.
But, I didn’t know what I didn’t know, so I focused on the money.
Around this time I befriended a local entrepreneur in Honolulu who had lots of connections with angel investors in Hawaii.
He was impressed, and eventually introduced me to a well known angel investor.
After we met, he said he was interested in investing.
I was ecstatic!
Well, at least, briefly.
As our discussions progressed I came to these realizations:
1) He wanted more than I wanted to give.
2) I’d been ignoring my business (and wife) for too many months.
3) I didn’t need big funding, I just needed to lower my expectations.
4) Money (especially from other people) entices you to take dangerous shortcuts.
After wasting nearly a year trying to raise funding, I decided this was NOT the right path for me.
I still needed to figure out a lot of things, especially my market messaging, and it really is best to get money AFTER you figure everything out.
When your business still has lots of unknowns, it’s best to keep your budget low and to keep testing until you figure out what works.
When developing and launching a new product there are so many unknowns.
The problem that everyone faces the first time is you don’t know what you don’t know.
How can you unless you’ve done it before?
This is why I created the Hardware Academy.
It’s the place for innovators who are developing and launching a new electronic product to get guidance and training from those that have done it before.
And it’s where product innovators like yourself come together to help and learn from each other.
Check out the Hardware Academy.
Other content you may like:
- The Importance of Early Marketing, Selling, and Networking for Hardware Startups
- Lesson 3: The Strategic Way to Develop and Sell Your New Electronic Hardware Product
- 12 Requirements to Succeed with a Hardware Startup
- 12 Ways to Fund Your Hardware Startup
- Comparison of Product Development Models and Risks
