We did a priced round as the first $ into the company in Feb 2021. As a result of this, we didn't have an opportunity to accept many small checks from angel investors - it all just came together quickly and we got back to building given we were pre-product.
Our Goals for the “community / party round” :
- Reward our early users & customers (founders & sales people) with an opportunity to invest small amounts and benefit from our upside, give them more incentive to help us long term
- Get seasoned b2b operators on the cap table at any amount they wanted for advisory & future lead generation
- Execute this as async as possible with minimal to no live meetings
Ultimately, we wanted to build an army of helpful individuals we could tap for what we all need - customers, hires, promotion, etc.
What we did, step by step :
- We kept a running list for 6 months from every customer call, email, tweet, or otherwise where someone helpful or smart showed intent to invest or excitement around what we were building
- We then opened up an RUV with a minimum investment of $1K and a max of $10K. This is free (sans blue sky fees) and takes 10 minutes to setup with a ~24h turnaround time from Angel List to be approved and start accepting checks
- We created a Journey to engage our list of individuals with our story consisting of videos, memo, links to invest all in one place - essentially everything one would need to make an investment decision
- We used Cabal to send personalized emails to our high intent list with the Journey, followed up with people who engaged and closed the first tranche in 2 weeks
- We then opened it up to the RUV Alliance, a community of 1500 accredited angel investors who had expressed interest in investing publicly via Twitter. This required sharing the Journey with their community via their email newsletter and discord (now Slack) so it was slightly more public and required being active in the discord for live questions, etc. We then closed a few weeks later.
- Our RUV had 98 investors ranging from YC founders to IC salespeople to VPs at FAANG with a median check size of ~$5k
- From initial send to close was about 45 days - more on this below, but we ended up doing 50% RUV and 50% direct SAFE, the latter led to this taking longer, it would have been half the time with just the RUV
- The RUV generally doesn’t work for larger angels (or at least the ones that were interested in Journey) given these people wanted to be direct to the cap table at their amounts ($50K+). We used Party Round to send out the SAFEs, sign, and get wires for these people that we really wanted. This is a free tool in beta right now for SAFE raises only.
- RUVs out of the box have no general solicitation rules, so you can’t promote the offering publicly - one of my tweets was a bit in the grey area during this raise and I had to delete it at the request of Angel List. You can apply for general solicitation (506c) with Angel List, I believe it is just more expensive than a standard out-of- the- box RUV which is free sans blue sky state filing fees (<$1k). The more important learning here is you really need to generate the interest before you have the RUV live given no one is going to generate demand for you. Even though we opened it up to RUV alliance, having a tranche already filled helped to create inertia and continue the momentum when we opened it up to that community
- RUV Alliance ended up being a very high quality channel for us with over 30 director level and above SaaS individuals investing
- The journey went a bit viral and we ended up oversubscribing and having to cut people down by 50% - this kind of sucked and in the future, would have kept it more locked down by having the Angel List or Journey link expire or just keeping a closer eye on things.
- Given the virality, there was inbound institutional interest in what we were doing, so we were able to make some solid connections with firms for future priced rounds
For the future:
- We’re still figuring out how best to “activate” our army of investors in an ongoing cadence, but the Check Size:Helpfulness ratio is real — the $1K investors consistently send the most customer leads, promote us on Twitter, and are most responsive when we do investor updates or quick asks
Tools we used
Hope this was useful for other founders thinking about doing something similar.
Feel free to reach out to me if you have ideas on how we could have executed better or if you are thinking of doing this at your company!