For early-stage startups, fundraising — or lack thereof — can actually break a company. Without it (or enough traction to bootstrap), the result often ends with an extreme pivot or system shutdown.
And when companies do secure funding, the celebrations typically cut out pretty quickly, as the teams must immediately work toward investor expectations and begin planning for the next round. We caught up with three Austin tech startups that closed funding rounds since the start of 2017 to understand more about what happens following a funding announcement.
SubVRsive raised $4 million in February from single investor WPP. CEO Johannes Larcher filled us in on how the team reacted and what happened next. Fortunately, Larcher said they don't have any immediate plans to pursue another funding round just yet, given that their VR ad platform has generated revenue since day one.
Y'all secured $4 million in February. What was the team's reaction?
Knowing that the investment would allow us to accelerate growth, our team was incredibly excited to secure the funding and just as thrilled to be working with our investor WPP to bring the benefits of VR and AR to their family of agencies and brand clients.
What were your plans once you'd secured the funding?
After announcing the investment, we quickly began the process of building out our team with some of the best talent in the industry. Since February, we've doubled our office space and have filled several key positions — especially on the interactive VR side of the house.
Do you get some time to breathe, or do you have to immediately start prepping for the next round?
We've been fortunate to generate meaningful revenue from day one of our business, and the round we raised mainly allows us to invest a bit more quickly in important areas than we would have otherwise been able to. We don't see a need to look for additional funding in the foreseeable future but have been busier than ever creating immersive experiences for a growing list of brands and agencies.
Eleven investors contributed to XOR Data Exchange's $2 million funding; marking their first capital infusion since a 2015 $6.3 million round. Although CEO Mike Cook said additional financing gives them a chance to breathe, the XOR team has been at its busiest yet as it sets out for strategic growth partnerships.
XOR secured $2 million in January. What was the team's reaction?
We are a close-knit group at XOR, and we share our vision across job functions and roles; so our whole team was aware that we were seeking this funding and the reasons behind it. Everyone was pumped when we were finally able to share the news with our friends and clients. But more than anything, we were all excited to get to work supporting some very exciting partnerships and contracts. We'll be announcing some of those publicly over the coming months.
What were your plans once you'd secured the funding?
XOR pursued this funding extension specifically to support several large-scale contracts and growth initiatives in the pipeline. Since we closed the round in February, we have made big strides in supporting that growth. With our core technologies in place with some of the biggest players in finance and communications, we're focusing our efforts on additional distribution channels to make our solutions available nationwide, no matter the size of the client.
Do you get some time to breathe, or do you have to immediately start prepping for the next round?
Our first priority after raising this round was to get to work on our growth strategies. Compared to raising more money, it absolutely feels like time to breathe; but rest assured we're busier than ever! The strategic partnerships we're pursuing will take us a long way toward not needing additional funding down the road. Once we make headway on these partnerships, we'll stop to breathe and stop to see what any future funding rounds may look like.
Roomify raised $1.1 million in March over two rounds from about 20 investors. Co-founder Shanil Wazirali compared raising a seed round to a full-time job — in addition to all his other responsibilities. Roomify launched in 2013 and offers college students bundled packages of living essentials like bedding, toiletries, eating utensils and cooking tools.
What was it like trying to raise funds?
It took us a while to raise to full $1.1 million and that’s after bootstrapping the business for few years. People read headlines of startups getting funded left and right but in reality, it’s a full-time job to go and raise funds and takes months.
Do you get some time to breathe, or do you have to immediately start prepping for the next round?
Once receiving the funds, you’re off to the races and are expected to achieve the milestones that are initially promised to your investors. Yes, raising capital is an accomplishment due to the fact that it’s very difficult; however, in reality, it’s just a source of financing your company and getting back to the business.
Images provided by company websites. Responses have been edited for clarity and length.
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