StyleSeat – Path to Venture Capital

If you in the process of looking for Venture capital in Australia, it is tempting to watch case studies of the journey from other Entrepreneurs, although comparing the process of recruiting investors in US to that in Australia is not always comparable given the differences in the economic background of these countries.

However as a take away the attitude and tactics adopted are important to replicate. This video interview with the CEO/Founder or Style Seat is one good example of this and I have enclosed a cheat sheet of some of the more important points.

Founded in 2011, 3 rounds of funding totalling $39.9M

Today 300K stylists use on regular basis, all of that growth has been organic.

Step 1 – Bootstrap (1.5 years)

  • Keeps U focussed on the goal of prize
  • Eye and focus on metrics

Step 2 – Seed funding usually about $1-3M but Raised a surprising $4M !

  • Had thousands of users, growing fast by people who could use it for genuine commercial benefit
  • tried larger VC’s but were not users of or passionate about
  • Bunch of friends chipped in
  • Was raised in several steps
    Step 1 – based on valuation raised $700K
    Step 2 – As starting to get more momentum, getting traction (building back office tools) – Got more $
    Step 3 – Another node raised more $
  • Micro VC’s
  • Investors that understood backoffice/SaaS because that was the products starting point (1st 2.5 years)
    (wanted to eventually be a market place, but initially needed the back office tools for the businesses)
  • Cared about the consumer engagement, and these were the KPI’s for the business
  • Plans pitched to investors: we want to be the market place, but to get there must 1st become larges back office
    (Its a harder path, but puts you ultimately in a stronger position)

Step 3 – Series-A (early 2014) is about numbers (Lipskay-Philosopy to grow business) ($10.2M)
Needed because company needed to build the team: more engineers, Data science to grow
(grew from 6 to 45 people)

  • Due Diligence process – Financially and Metrics line up with what was promoted
  • New board member as result of investor
  • Pitch=Market huge we are fastest growing
  • Here are competitors, we are growing faster and how we can leapfrog
  • The industry shifting from workforce being employee to independent contractors, and we were facilitating that move
  • The pitch is then: Here is how we are going to leap frog existing competition
  • Here is how we will transform the industry
  • Metrics – Dec 2014 conversion of new client on mobile app is 1%,by Sept 2015 its 9%

Step 4 – Series-B = $25M (closed last week)
This year we will do over 1 billion in bookings through our site (of potential of $80 Billion in USA)
Need better capital so can do this faster
Fastest growing, turning international

Focus now:

  • Free for a stylist to run their business, scheduling / Marketing tools is $30/Mth
  • New model to have paid plans to generate business for stylists:
    • 40% of 1st appointment
    • 10% thereafter
    • THEN using client retention tools Styleseat will hassle to help get more customers for stylist
      (Be embedded in life of the stylist business)
  • 1-2 things to get through the process
  • Fund raising is hard
  • Find a great advisor(s), raised money recently , understand the players
  • How to respond to emails, how to speak to investors
  • Have an amazing team

Hope this helps, it might be useful to print off this page and use it to add your own notes as you watch.

Guest Post: Martin Hannah – Cypernet Ptd Ltd

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