How We Failed to Raise Investments in 2023
Six years ago, we embarked on creating a no-code website builder with a tiny band of developers and designers. Throughout this time, we've poured our heart, soul, and savings into making Siter.io come to life. Despite a successful public launch a year back, our attempts to raise funds hit a wall this year.
We kicked off 2023 with high hopes, pitching to investors, dialing into calls with top VCs, and networking with influential industry figures. Our project sparked significant excitement, particularly after clinching 'Product of the Day' and 'Product of the Week' on Product Hunt. Yet, the buzz didn't translate into investments.
So, why didn't Siter catch the financial wind it needed?
The answer seems to be a cocktail of global economic crises, market instability, and concerns about our team's focus.
Many advised against fundraising this year, suggesting we continue bootstrapping and bide our time, as the climate for young startups to attract funding has turned icy. These voices aren't just anyone—they're heavy hitters in our field, and their insights carry weight.
Then there's the issue of the team. Investors shy away when founders are juggling multiple projects. They question our commitment. I get where they're coming from, but isn't there a silver lining? A multi-project founder can leverage a vast network and resources, acting like a Swiss Army knife—versatile and resourceful. I'm in this camp, working not just on Siter.io but also on Designmodo, Pulsetic, Static.app, and supporting my wife's project, Absurd Design.
Ignoring the chorus of caution, we continued to pitch relentlessly, but fate wasn't on our side. A few months in, we decided to pivot our focus solely on the product—and it's a decision that's starting to look wise. We're now on track to hit profitability by Q1 of 2024, and I'm optimistic about sustaining growth beyond that.
In our latest push, we've launched a Figma plugin, both here on Indie Hackers and on Product Hunt, aiming to turbocharge our growth. Check it out here.
I'd love your thoughts on this. What could we have done differently? Is it a strategic misstep to be a multi-project founder, or could it be a hidden strength? Are VCs right in their cautious stance?
Looking forward to your insights.
Investors listen to lots of meetings every day. Like anyone who has to review a lot of things, they can't bring their full intelligence and wisdom to bear. They're going to pattern match and go by heuristics.
You can tell a huge story about how your other projects will help you. And you might even be right. But there's conventional wisdom that this is a bad idea. And, if you get them to listen long enough for why it's actually a good idea in your case, then you've burned a lot of the very short amount of time you have with them.
Practice giving a 2-minute pitch in which you both need to explain your business and also anticipate and defuse any such objections you'll get. You'll see just how much every word counts.
An unfortunate consequence of this is that, if you want to raise funding, you might have to mold yourself to make your story simpler, even if it doesn't actually improve you objectively.
For instance: I have two companies right now. An older bootstrapped business designed for slow growth and passive income, and a newer business designed for hypergrowth. They do related things, and they employ the exact same people. Originally I wanted to keep them the same company. Saves incorporation fees, fewer taxes to do, no having to worry about which company pays my Notion subscription. But, if I have to answer the question "When was your company founded" with "2017" instead of "2023," I probably won't get the chance to explain why they should still treat us like a company just founded. So that's a major reason why we split them.
Thank you for sharing your story. It's really helpful to learn from someone who has figured out how to talk to investors and make smart business moves.
Your tip about making a short and strong pitch is great. It's a reminder that we need to be clear and quick to grab an investor's attention.
It's also eye-opening to see how you had to split your businesses to fit what investors are used to. Your experience shows how important it is to sometimes change our plans to meet others' expectations.
Thanks again for the advice. It's super useful, and I appreciate it.
I can't exactly say I've figured it out. UpToSpeed is still at the beginning, and has closed a tiny amount of outside capital. I've just managed to absorb a lot so far, and from being interested in entrepreneurship my whole life.
But as a former academic, I do have a ton of experience dealing with reviewers, which has many similarities.
Very interesting insights @AndrianV, this is a topic that goes straight into my domain expertise, I have been working in tech investments for the last 7 years. This is a perfect timing, as I am building a tech-enabled solution to put my team of bankers to help founders get funded by providing qualitative insights and assessment (not the traditional tinder-matching between founders and investors that some platforms offer).
If you want, and given that you are not afraid of exposing yourself publicly, I invite you to share with us more details, so we can deeply analyze your case.
When it comes to early-stage deals, investors usually look at:
1- Market: Is the opportunity big enough to make a 15x in their investment? Is it a growing market?
2- Team: Is it capable of executing, finding opportunities, adjusting the product to the market's feedback (this takes a lot, as often means acknowledging the previous vision was wrong, and CEOs usually have a high ego), hiring, firing, and pivoting if needed.
As an investor putting my (or LPs' ) money into your project, I am aware that the most likely output will be to write off my investment in a couple of years; therefore, the least I can ask the founding team to align interest, is a full-time dedication to the project.
3- Product-Market-Fit: Investors want to see early indicators of success in your idea, MVP, product, etc. This is the so-called traction, and its best metric is revenue. However, not all start-ups have thousands of dollars of MRR, so we will need to find alternatives: we can pitch to investors a long-waiting list; a big number of users to monetize; etc.
When you talked to investors, was revenue the best metric?
Last but not least, investors are humans investing in humans, and building up relationships is key to generate trust. Keep engaging in conversations with those investors who rejected you, and show them you can receive feedback, adapt the business, and ultimately your trajectory. Investors love coachable founders!
As said above, I invite you to share your deck with us, and I will be happy to give you my thoughts; in our service, we look at:
1- Problem
2- Solution
3- Market
4- Traction
5- Growth Plan
6- Business Plan
7- Team
8- Ask
Interesting read, I think you are definitely right with developing and focussing on product. The UI looks sleek and inviting! Your solving an issue for many no code business owners and can see the whole teams persevere! I will be keeping my fingers crossed for you and continue to follow your journey 🙌
Thank you, Louis!
It's clear that you're committed to making Siter.io successful, and I think it will pay off.
Sure, juggling different projects can make some investors think twice, but it also means you've got a bunch of skills and contacts that can really help out Siter.io. You just need to make sure you're showing folks how all that good stuff you've got going on is actually a win for your main gig.
With the Figma plugin thing you're doing, that's a smart move. Figma's got loads of users who might get into what you're offering, so it could really get your name out there.
Thank you for your comment!
There are many reasons why a startup might fail to raise investments. Some of the most common reasons include:
A lack of a clear and compelling business model. Investors need to be convinced that your startup has a viable path to profitability. If you can't clearly explain how your startup will make money, it will be difficult to raise money.
A weak management team. Investors want to back startups with experienced and capable leadership. If your team doesn't have the track record or expertise to execute your business plan, it will be a red flag for investors.
A lack of market traction. Investors want to see evidence that your startup is gaining traction in the market. This could include things like customer growth, revenue growth, or positive press coverage.
Bad timing. The fundraising environment can be fickle, and sometimes it's just not the right time to be raising money. If the overall economy is struggling or if investors are focused on other sectors, it may be difficult to raise money even if your startup is fundamentally sound.
Unrealistic valuations. If you're asking for too much money, investors will be less likely to take a chance on you. Make sure your valuation is realistic and based on your company's current stage and potential.
As someone who has raised money a couple of times I can advise one sure fired way to secure funding.
3.Get those companies to agree to use your product (set a monthly price for you service) this will need to be tweaked you will not get it right the first time .
I'd like to mention congratulations on getting to profitability by Q1 2024.
When I look at the stack of apps your launching I see a lot of aesthetically pleasing designs, I'm just personally not sure of market demand of each product.
Which does seem energy is being distributed across ideas, instead of focused.
But if each is highly profitable there's no real issue.
I'd love to know more about the customer use data across each of them, what has highest potential and what is growing fastest.
Focusing on what works and makes money is key.
Good luck.
Thanks! Our main target is designers, developers, marketers, business owners.
Hi @AndrianV, really insightful read. That you for sharing your lessons.
I'm curious, would you consider selling the product in an acquisition? What price range would you sell for in that scenario?
I always consider selling projects, but it depends on the offer. I have received many offers to sell Designmodo.com over the years, but I have never sold it, as it's my main business.
Optimise for profits and not funding, and you will own your life!
It's easy to say 😄
100%. But life will be even easier when it happens. I mean, the business has to make a profit at one point or it is not really a successful business. You might aswell align from the beginning. Also, when you optimise for profits you are forced to focus on what the customer wants. If you optimise for funding you are optimising for what the VC's want.
Keep doing bro! Learn from failing.
Sure! Keep pushing!
Nobody said it would be easy. Anyway thanks for sharing your lessons. Very useful for all who are in the same path.
Thank you :)