I first broached the idea of launching a digital media startup two and a half years ago on a family ski trip in Vermont. My brother, himself a successful entrepreneur, warned me it would be one of the hardest things I would ever do in my life.
He was right.
Like many of you, I’ve read the self-help guides preaching the path to instant wealth and success by reaching for your “true north”—finding a story you can sell to venture capitalists and a life with purpose. Most of it is drivel. In my experience, there is no secret to starting a company, raising money or growing a business. There is only hard work, a great team and luck. So much luck.
We closed our seed round last week. At the risk of adding my own banality to the chorus, I wanted to share what I’ve learned about what it takes to launch a business.
But first, a note about privilege.
The Logic started out with just $300,000 in angel funding—a relative pittance compared to the operating budgets in my former life working at large media companies. And yet, I am the first to acknowledge that my own privilege has allowed us to get this far.
I could afford not to take a salary for two years, had access to capital, mentorship and counsel from friends and family. I recruited a team from a network based on almost two decades of working in journalism. I’m also a white man.
All of these things gave me a distinct advantage that I’m keenly aware most entrepreneurs don’t have.
Fundraising is all-consuming
I was sure things were going to be different for me, that fundraising wouldn’t take too long and that I could still manage operations while raising money. After fundraising for nine months, I am exhausted, and my inbox contains many, many unread emails. The process took longer than I thought it would and kept me out of the newsroom for too long. If there’s one piece of advice I would offer to any startup founder, it’s this: start fundraising six months before you think you need to.
Keep your financial reporting in order
It’s easy in the day-to-day grind at a young company to put bookkeeping and financial projections off for another day. But if you plan on fundraising, that’s a big mistake. Don’t focus on putting together an attractive pitch deck—what every investor wants to see are your financials, both historical and forward-looking.
Stay true to your vision
There’s good money and bad. At some point, an investor will make a proposal you’ll be tempted to accept. It may be more money than you really need, or the right amount but on terms that dilute your ownership stake. It could come with demands for a strategic shift, an accelerated growth plan or that you bring in their people. At these moments, it’s vital to know what your goals are and why you need the money. If a funder proposes investing on terms that compromise your vision, their money isn’t worth it.
Be consistent with your investors and staff
One way to resist the temptations of bad money is to be consistent in your messaging. We worked in cramped temporary offices this fall, and I’ve had to give at least one pitch our entire team could hear. At first, I was worried I would say something they could misconstrue, but now I’m grateful they were able to listen in. It showed that what I was pitching to a potential investor was the same thing I was telling them. You want to work with investors who believe in what your team can produce, and having both sides on the same page is an essential part of moving forward as a business.
Be honest with your team
An incredible team of people took a chance on this company early on. Some left cushy jobs to come work at a startup. Their big risk earned them my brutal honesty about the business. I warned our first recruits that the business could die in three months. I warned our second set that our burn rate guaranteed only six months. And throughout the summer, I kept them all apprised of where we were in our fundraising so they wouldn’t be surprised whatever the outcome. They deserved the right to make hard choices for themselves.
When negotiating, one plus one truly does equal three
The best advice I received, from a trusted adviser, is that ultimately, you want your negotiating partners to come out as winners, too. When you’re negotiating a term sheet, it shouldn’t be a hostile transaction. To get to a mutual win, you need both parties sitting on the same side of the table. Your goal is to set up a long-term working relationship that is built on trust, not to come out on top at all costs.
Bless your angels
Back in the fall of 2017, The Logic’s very first investor wrote me a $50,000 cheque after a 20-minute conversation. He didn’t ask for a business model, a pitch deck or make me go through any due diligence. It took me another six months to secure our next investment. Had that first angel not written me that first cheque, I probably would’ve given up before ever starting. I’ve come to fully appreciate the term “angel investor.” The early backers who take a flyer on a business without even a name or a product are the unsung heroes of the innovation economy. And when those same investors follow up with additional investment in the next round, you know you’ve gotten lucky.
Recognize the silent partners
For the first two years of this company, our household income was cut in half. That meant more pressure on my wife as the sole breadwinner for our young family. My long hours also left her to manage more parenting duties. Without her support, patience and belief, The Logic wouldn’t exist. Founders are glorified for what they create, but few succeed without a partner who does the real work, sight unseen. I’m eternally grateful to have a partner who supports this work.
Time to make dinner
A friend of mine said this week that congratulating someone for closing a funding round is like congratulating them for buying the groceries: you now have the ingredients, but you still have to cook the meal.
While we are grateful to our investors for their belief in what we’re building, all they have given us is the time and resources to build a lasting digital media company. The real runway will always come from our subscribers, who understand that good reporting costs money to produce, and that journalism at its finest is worth paying for. We exist to serve you, and remain deeply committed to covering Canada’s economic transformation.
If you haven’t subscribed yet, there’s no better time. We’ll keep you informed about the complex challenges and opportunities the innovation economy presents for Canada.
If you are a subscriber, there’s no better time to consider purchasing a group subscription for your company. The Logic will keep your team informed about how your company fits into a fast-changing world.
Thanks for your continued support of what we’re building. We all feel so incredibly privileged to do this work.