Written By: Brooke Hansen on behalf of Joelle Parenteau, Founder, Xpeeria
There is no tried and true formula or algorithm for finding investors. From Shark Tank to Kickstarter, angel investors to friends and family, there are so many different ways to fundraise. For Xpeeria’s founder, Joelle Parenteau, the process of raising her first round of funding was unconventional (and unplanned) to say the least.
She confesses to having a slight advantage fundraising for Xpeeria: having worked hard for the previous three years successfully starting up a small company that now sustained her, some would say she had earned her stripes in the start-up world. She had proven she knew what it meant to hustle, and in the process gained confidence, respect as a young entrepreneur, invaluable experience, and a support network.
Another advantage? She didn’t initially know she was fundraising. Just a couple weeks after first sharing her idea with a friend, who urged her to pursue it, Joelle had a coffee meeting with the co-founder of a very successful start-up. She’d managed to connect with him since they had so many mutual connections. He asked what she did and so she thought, why not share her idea with him to see what he thought. His answer caught her totally off guard: he loved the idea and asked if she was fundraising. “Uh… yes?” And that’s how it all started.
But now she needed a valuation. Once again she admits there really wasn’t much of an art or science to it. She very roughly estimated how much money she would need to get started. She did not need the cash for herself since her first company allowed her to live comfortably enough, but she would need cash to hire developers (keeping in mind that things always cost twice as much as you anticipate). A quarter million seemed reasonable. She also quickly researched average valuations for early rounds of funding and asked her friend what he thought. After all, she had nothing but an idea. $1 million seemed like a good number. Sure, why not?
She’d also heard you should expect to give away about 20-30% of your start-up in each round of funding. Raising $250,000 at a valuation $1,000,000 would mean a post-money valuation of $1,250,000, so the $250,000 she would sell to investors would essentially represent 20% – the ideal scenario. So that would be her number.
With one investor already interested, she began sharing her idea; and casually mentioning that she was fundraising. Next thing she knew people were asking her for more details – inspired by the idea and intrigued by the opportunity in a start-up. Here’s a glimpse at the seemingly random encounters that became Xpeeria’s first round of investors:
Joelle told a friend she was fundraising and he responded that ‘he had friends who had money’ and asked if she’d like an intro. “Sure?” The friend in question did not live in Ottawa, so she picked up the phone and gave him a call. He was interested and said he’d think about it. A few days later he emailed her a few more questions. She answered and he asked where to transfer the funds to. To this day, Joelle has yet to meet this investor tucked away in North Bay.
This same friend also introduced her to a lawyer whom she met over coffee. After a 30 minute chat, he also was interested. A week later Joelle received an email saying: “I’m in”. By this point she had established the minimum investment was $25,000, and he agreed to the terms. Shortly thereafter, on Christmas Eve Day, the lawyer asked if he could double up, increasing his investment to $50,000. The ultimate Christmas gift.
Next came a coffee meeting at Whole Foods. The guy she was meeting saw someone they knew so he called him over. He was a cop, and the conversation turned to Xpeeria. Fundraising was casually mentioned. Joelle was completely unaware this had turned into an impromptu pitch and didn’t think much of it when he asked for her number. An hour later she received a call. He had spoken with his wife, and they were interested in investing, asking for more details, and eventually deciding to invest.
For those who don’t know, Joelle is an avid poker player. She plays weekly with a group of friends in Ottawa. At one of these weekly home games, the topic of Xpeeria came up. She talked about the idea and the progress. Once again, it was a casual conversation, she had no idea she was informally pitching. The next day she received a message from one of the players she’d met for the first time at the previous night’s game. He was interested in the company and asked her to go to lunch. He brought along his wife who told Joelle that when her husband came home from the game talking to her about Xpeeria, she loved the idea, and they wanted to invest. After the lunch meeting they were in.
That guy who’d first asked Joelle if she was fundraising, has since stepped up in a major way: he is Xpeeria’s lead investor, a key advisor, on the Board of Directors, and one of her closest friends. He believed in her idea from the beginning and continues to support her along the way.
From friends of friends, to casual meetings over coffee or around poker tables, Joelle has shown that potential investors are everywhere. It’s about getting out there and sharing your vision – but not without having put in the work beforehand so you have a compelling story to tell. While it isn’t always easy to find investors, anything is possible.
Having now used this initial funding to build an MVP and get their beta product out for early user testing in the Ottawa market, the next step for Xpeeria is their seed fundraising round which will open soon. And who knows what kind of stories we’ll have from that – stay tuned!