Tag: data science

The High Margin Fundraising Strategy

High Margin was incorporated on December 9, 2024. The idea was to #bootstrap the company to profitability by January 31st, 2025. But the only certainty when launching a #startup is that there is no certainty about anything. It was a long shot that we could close deals and have revenue coming in within 53 days. It’s day 53 and I believe we’re close.

Last weekend I decided that with the #momentum we have building, it wasn’t worth the risk of running out of funds. I decided to start #fundraising to have a safety net: A plan to build our product, even in the unlikely event that all of our potential short-term deals fall through. The immediate interest was greater than I had anticipated.

I asked myself what would I do if we get commitments from investors and then close the deals we have in the pipeline? The conventional response would be “Well you’re not obligated to take the money.” True… but I don’t do “conventional.” I believe that I owe these people for believing in me and for jumping in so quickly. I need to show my gratitude for that.

The day I started High Margin, I reached out to a group of about 20 investors that had invested in a previous venture that I led, and I said some version of the following: “I want to thank you for believing in me, and for investing in me. I am giving you equity in my new venture, High Margin, and I am not asking for anything in return.”

Without exception they were all shocked (in a good way). One said to me “This is highly unorthodox and ‘not in market’. But the fact that you’re doing this is exactly why I invested in you in the first place.” I replied, “Well… I don’t really care what’s ‘in market’. It’s the right thing to do and that’s just the way I do business.”

Unreasonable Hospitality should apply to all aspects of business, including how we treat investors. So I’m going to take care of my supporters. If we close one of the deals in our pipeline, we would no longer need the investment. But I’m going to accept the funds from those that have committed by then anyway to show my #gratitude.

This is a win-win. It gives people an incentive to get in early. It also shows people my commitment to delivering a return on their investment. If we close a deal and find ourselves in a situation where we could #bootstrap, then the investors who committed early get a piece of a much more valuable company.

It’s fun to break rules that were meant to be broken.

Weighing the benefits and drawbacks of a bootstrap strategy

I incorporated High Margin 7 weeks ago and so much has already happened. It has been 7 weeks of non-stop hustle, of deep soul searching and self-reflection, of hope and resilience.

“This time, I’m going to bootstrap it,” I told myself. All the pieces are in place.

We have:

  • A great idea for a solution that can show immediate value and impact.
  • A team of smart, hard-working individuals ready to roll up their sleeves and work for the promise of future compensation and of being a part of building something great.
  • Enterprise customers interested in what we have to offer.

What could possibly go wrong?

It takes so much more to achieve that one spark that ignites the fire that can become a new, successful business.

It always takes longer than you think. Always.

I thought that if I explain to potential customers with full transparency that we can really help them, but that we don’t have the luxury of a 6-month sales cycle, they would understand.

The truth is, not having a runway is a “we” problem. What we have to offer is good. Really good. It will solve many pain points for restaurants. But that doesn’t mean restaurant companies will shift priorities and find budgets to work with us, no matter how much they like us and what we have to offer.

Very early on, we had three solid deals and it has been my goal to close at least one of them. One deal would be enough of a basis to build a long-term sustainable business. Three deals would be ah-maz-ing. I mean… we’re going to have a KILLER 2025 amazing.

I gave myself until January 31st.

With 4 days left, the deal status is:

  1. We’re committed, but we might have to do it later, not right now.
  2. Happy to give it a try. We will pay you as soon as we see value.
  3. I’ll let you know by the end of the month.

I’m thinking it’s time to raise a pre-seed round.  The feedback around our product vision is very positive and it would take little time to stand up a first version to get a few case studies under our belts.

These 3 deals are likely to turn into long-term successful partnerships. Is it worth the risk of running out of air just to avoid taking any outside capital? The answer is clearly no. It’s time to raise some money.