Yesterday, we announced that we secured $400,000 in a ‘Series A’ round of funding that we raised primarily from the local investment community. Today, the Roanoke Times picked up the story, which as always, is great local press for our company. Now, here is the story behind the story...
First of all, this entire process started about three years ago when I met Howard Kossak, an investment banker here in the New River Valley. Howard and I talked then about raising capital to grow our company, but we mutually decided that we weren’t ready at that time - and neither was the market. A year and a half later, business was picking up at a tremendous pace and the market was rebounding, so I decided to revisit my talks with Howard. I engaged his services and we began to develop our private placement memorandum (PPM).
Howard did a great job in assisting me with our capital raising activities. He was a mentor for me in a number of ways and I learned an awful lot from him. Throughout this process, there were a lot of cynics in the community that “warned me” against bringing on an investment banker to help raise the capital. A few of the investment groups I spoke with were strongly against seeing someone else being paid a fee on money they would invest. Most of them, in my humble opinion, were simply tire kickers looking for reasons to say “no” – that or they didn’t realize the type of impact I was able to make on the business with the time Howard saved me from capital raising – in that case they shouldn’t have invested anyway, and they didn’t. Howard shouldered a lot of the paperwork burden behind our deal and made quality introductions to a number of potential investors – many of which ended up investing. All in all, Howard was able to help us accomplish our capital raising goals while allowing me to focus most of my attention on growing our business. The results of that showed through and I never once guessed my decision to bring him on board.
Developing the PPM took several months, partially because I was still located in Northern Virginia at the time. It was while Howard and I were developing our PPM that I realized I needed to move our business to Blacksburg. I spent the summer in Blacksburg living out of a hotel and we opened our office here in the Virginia Tech Corporate Research Center in August of 2004.
By this time, Howard and I had contacted most all of the high net worth individuals in the New River and Roanoke Valleys, along with dozens of others throughout the country. Since we were only trying to secure between $250,000 and $500,000, we had a difficult time attracting any institutional investors. Likewise, because our business had been performing so well, we never felt any pressure to take on a deal that didn’t feel right. One of the most frequently asked questions I received from potential investors was: “why are you going for so little money?” While there are several answers to that question, the most frequently used answer was and still is, “because we don’t need it.” We’ve been a cash flow positive business for quite some time so we didn’t feel the pressure to chase money or a deal that didn’t feel right – from an entrepreneur’s standpoint that is a great position to be in.
As we began contacting the investment community, the rejections and non-call backs started right away. I learned a long time ago that people are very protective of their money, or the money they’re managing for others, so this was no shocker. At the end of the day I knew we just needed to get in front of enough people and we’d get the job done. Before long, we were able to secure investments from some very well known people in the New River Valley. Several successful CEOs and businesspeople came in as angel investors and others followed suit. In total, we were able to raise a hair over $400,000, all from smart, successful people, yet those that are willing to be patient as we execute our plans and aim to achieve our long term goals and objectives. That was very important to me and I’m thrilled that we were able to find those types of people who believe in us that much.
So... now that we’ve raised some money, what are we going to do with it? For starters, we’re going to be as smart as we can with it. One thing about us that you can say for sure is that we’ve learned how to stretch a dollar as far as it can go. Our founding team lived through the dot-com demise, we went years without paychecks, we worked in some grizzly environments… and as long as I’m at the helm, we won’t forget where we’ve been and how we got to where we are now (I will be blogging more about our story in the future). But more specifically, we’re going to invest as wisely as possible in three core initiatives:
1. Enhance our level of customer service and support
2. Expand on our R&D initiatives
3. Reinvest in our sales force and marketing activities
We see a very bright future in the messaging marketplace with lots of opportunities for growth and development. You’ll see a lot of “innovation within the inbox,” as we like to say, from us. We’ll be adding a great deal of features and functionally to our existing platform as well continually improving its overall performance. And as we develop our products and services, we will not lose sight of our customers and how well they need to be treated. Customer service and support excellence is a top priority at Webmail.us and everything we do we do with the customer in mind.
I’ll be expanding on many of these initiatives moving forward, sometimes exclusively through my blog. Stay tuned... we’ve got a lot to talk about.