Like getting a date for New Year’s Eve, raising funds from angel investors may require making a move on multiple candidates. One entrepreneur turned the journey of seeking capital into a basic component of his job description. He’s the founder of LearnBoost, a free online grade book and classroom management tool for teachers.
The company started with a plan to develop something using technology for educators. The entrepreneur met with teachers and administrators to determine their biggest problems. He settled on the need to address limits in the software for student information. The existing tools were costly and dysfunctional for schools.
The first roadblock to attracting capital was a perception that selling to schools is too difficult. Teachers do not control budgets and the decision makers take too long. So the company gave away the product for free over the internet. This permitted word-of-mouth to spread until school system technology directors and superintendents had to listen.
This innovation to shortening the sales cycle with schools also created the attraction of angel investors. The company gained traction by first developing customers, then building product, and finally attracting investors.
Selling to the market was conducted even before the product was built. With customers waiting in the wings, the entrepreneur contacted some website developers and work began on the prototype.
The first version wasn’t much compared to the eventual product. But it was enough to take to customers as a trial. Feedback on features was then gathered. Of course there were plenty of limitations noted by customers. But at least they were involved in the development process. They were committed customers.
By this point the bootstrapped project had resulted in personal debt for Rafael Corrales and his partners. But angel investors all wanted to listen to his story. After all, he had a prototype and plenty of customers. The next step was outside funding for an internal technology development team.
Entrepreneurial hustle led to the company attaining co-founders. This resulted in more connections to other investment sources. The company cast a wide net among the investment community. It raised capital from various angel investors as well as more than one venture capital firm. By having a pool of funding resources, future rounds of capital were easier to attract. That’s an important lesson for the long-range planning of a new company.