Why having people from your network bet on you with an angel investment is like motivational rocket fuel.
Tal Moore, an Entrepreneurs’ Organization (EO) member in Los Angeles, is founder and CEO of Popsmith, the secret to making perfect movie theater popcorn and homemade kettle corn at home. We asked Tal, a serial entrepreneur, what he learned from his first-ever round of raising startup capital. Here’s what he shared.
In December 2022, our family and friends’ seed round for Popsmith closed, raising a total of $1.53 million in less than 45 days from 84 investors. We were especially pleased to get these results during what was arguably one of the worst startup investment environments since 2008.
In the past 20 years, I’ve founded multiple companies, yet this was my first time raising a seed round of capital. Here’s what I learned:
1. Stick to a Super Simple Pitch
Present your idea in a simple, straightforward way. Our opening slide, “If You Read Nothing Else,” provided a summary of who we are, what type of business we’re building, our exact “ask,” and why it’s worth an investment.
2. Branding and Research Are Crucial
It took us a year to develop our brand strategy, values, identity, color palettes, and brand promise. We went deep, spending hundreds of hours on research into our core audience and their motivations. As a result, we know exactly who we are, why we exist, who our target customer is, and how to communicate effectively with them.
3. Aim to Surpass Your Initial Funding Target
The money you raise will be spent a lot faster than you expect on labor, inventory, and marketing. Initially, we targeted $1 million, but in the end we raised 50 percent above that. While that meant further dilution, we prioritized having more money in the bank.
4. Set a Stretch Goal
Externally, we stated our target at $1 million. Internally, our stretch target was $1.5 million. When we opened the round, after an initial wave of commitments, activity died down. I upshifted into full-blown sales mode: making calls, pitching, emailing, and texting. When we reached $500k, I notified prospects that we were 50 percent funded. That resulted in an uptick. As we reached 75 percent funding, then 80 percent, then 90 percent, I notified our prospect list. When we hit $1 million, I communicated that we were fully subscribed but would extend the seed round by one week. The response did not disappoint: We raised an additional $500k. Knowing that others had invested was the validation people needed to act. FOMO is real.
5. Don’t be afraid to say “I don’t know.”
Prospective investors often ask thoughtful questions. While I could answer most, some stumped me. Remember that it’s OK to say, “That’s a great question. I don’t know the answer, but I will find out and get back to you.” Then, make sure to follow up, which fosters trust and confidence.
6. Try Not to Take Rejection Personally
I was beyond excited that 96 percent of funds came from my personal contacts. When friends bet on me, it felt magical. And on the flip side, when friends said no, it hurt. It helped to remind myself that I truly had no idea about my friends’ financial situations. There could be a lot of variables in play. Though I found it impossible not to take rejection personally, I used those feelings as fuel to motivate myself to crush our business goals and benefit those who invested in me.
7. Set a Low Minimum Investment
I chose an unusually low investment threshold of $2,500 for three reasons:
1. This was the first time many of my friends and family — including my mother — made an angel investment. I wanted the experience to be inclusive and minimize their risk.
2. Every investor would get a free popper and (we hope!) would join our tribe of enthusiasts on social media, spreading the word. So — the more the merrier!
3. We gave vendors and contractors the option to convert their fees into equity. A lower minimum investment made that idea more palatable. Plus, now our contractors think like owners.
8. Don’t Overlook the Quality of Your Relationships
For nearly 20 years, I’ve actively participated in various business networks and organizations, including EO. That involvement put me in the same room with extremely smart, successful entrepreneurs who were instrumental in my growth and success.
Giving back is also important to me. I show up for my friends, family, and community with deep commitment and involvement. As a result, I had a reliable network when it came time to raise funds.
9. Believe in Yourself Completely
As an entrepreneur, you have to go all in on yourself. I’m from an uneducated, working-class, immigrant family. We lived in subsidized housing, shopped with food stamps, and had no health insurance. My mom raised two sons pretty much on her own, worked two jobs, and showed incredible grit and determination. As a shy, overweight kid, I had low self-esteem and few friends. I learned self-reliance to cope, tried every possible job to make a buck, and soon discovered my entrepreneurial spirit.
I started my first company, Gumballs.com, when I was 21. My self-confidence grew as my company grew. I dealt with impostor syndrome. I hit my goal of becoming a millionaire by the time I was 30 — at age 26. I went on to start a half-dozen other companies. Eventually, I divested of all of them to start Popsmith. While I didn’t need to raise seed money, it was a smart way to mitigate risk, and mostly I just wanted to share the joy of entrepreneurship with the people who have supported me all these years.
We’ve built a talented team and stacked the odds in our favor. With my friends and family joining me on this journey, I feel confident that success is in sight!
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Guest Author: ENTREPRENEURORGS
