Realtime is a social network built around pop-up video chats, but it didn’t start out that way. I founded the company after dropping out of college and moving to the Bay Area. Initially, I tried to fundraise for over a year with an idea for an in-person meeting product–the goal was to help people connect in person in 24hrs or less. We had great retention and growth, but people weren’t giving us funding. I wonder why….
Pivoting and Raising During the Pandemic
The pandemic changed things, though. When COVID happened, it blew up our idea because people simply couldn’t meet up in person anymore. However, because I still believed in our mission and vision, I decided to pivot and turn my idea into a video-first mobile platform. I began fundraising again, but this time for a mobile app that allowed users to meet up over video. By early 2020, I had a year of mostly rejections under my belt: I had over 25 meetings, about three positive responses from angel investors, but no venture capitalist interest in the product.
The turning point came in the summer of 2020. I had a product in alpha testing at the time, and I had been talking to Sam Altman (the CEO of OpenAi and former President of Y Combinator) about some ways Silicon Valley could help the Black tech ecosystem as a whole. Toward the end of our conversation, Sam asked me about what we were working on at Realtime. He had already made some investments in video-related products but hadn’t yet jumped into anything in the social media world. Sam ended up investing in Realtime! Things began to snowball from there: I had a list of people we were planning to contact and chose not to go back to investors who had already passed on us.
DocSend Startup Index Note:
For your Seed round, it’s crucial to have a product at least in the alpha stage like Realtime’s. In our Seed-round research, over 90% of companies that got funded had a product at least in alpha. These companies also had more robust product and traction sections in their pitch decks compared to companies that weren’t able to raise successfully.
I started talking to people who were already in my network, like Kickstarter founder Yancey Strickler, and I also reached out to people on Twitter. Gradually, these connections helped expand my network: we had about 15 to 20 meetings with angel investors, and the majority of these ended positively with investments. After we had already secured six figures of capital from Sam, other investors seemed more willing to take a chance on us. On the VC side, we ended up talking to 25 or 30 firms and averaged around three meetings per day when we were at our busiest. I’d recommend this rhythm to other early-stage founders: during your most active fundraising period, set a goal of averaging three meetings a day, targeting both angels and VCs.
Even with our success with angel investors, most VC firms ended up passing on us. Often, they thought Realtime didn’t “have what it takes,” or they didn’t see us as differentiated enough from Clubhouse. But there were some investors, like Alexis Ohanian, who had a deeper understanding of social: he saw our path for growth and understood why Gen Z would want to interact on a video-first product without having to be on stage or perform for an audience like they would on Clubhouse. Smaller firms like January Ventures, CapitalT, and Amsterdam Venture Partners also invested with us. In total, we talked to around 30 VC firms and ended up accepting investments from three of them.
DocSend Startup Index Note:
Vernon’s experience tracks with our fundraising data: seed-stage startups averaged about 40 fundraising meetings with potential investors in 2020.
My 2020 Fundraising Timeline
After we decided to pivot, we began ideating on our next move in mid-March, 2020. A month later, in mid-April, we arrived at the video-first mobile app idea that we were going to launch. From mid-April through the end of May, we were busy working on the app. While we were finishing the app in May, we began putting it into a small community of alpha testers. The engagement was very high, with users spending several hours on the platform each week. While we were in alpha testing, I began speaking to investors to get a temperature check on how the fundraising marketplace might receive our new idea.
At this point, we were still trying to figure out what we were as a company. But once we saw such exciting engagement levels, we knew we had to double down and build toward the current product we had in alpha testing. We were busy developing our product throughout the entire time we were raising money. From mid-June through July, I met and raised only with angel investors. Between mid-August and mid-September, I focused on raising from venture investors. The whole process took eight to twelve weeks, and the VC side took four to six weeks. There was a bit of a lag on the VC side because when we met Alexis, he was still forming a fund–we had to wait for him to finish his raise before he could invest with us. Other VC meetings fell through for a number of reasons (our valuation may have been too high for them, for example). As a founder, I had to make hard decisions about which priorities to budge on and which investors I really wanted to work with. We announced our $4M seed round in December 2020.
DocSend Startup Index Note:
According to DocSend’s research, 28% of companies raise their seed round in 8-12 weeks like Realtime. only 15% of the companies we surveyed raised in 1-6 weeks. 11% of companies in our survey took 12-18 weeks to raise, 16% took 19-24 weeks, and 30% spent 25+ weeks fundraising.
How I Developed an Investor Targeting and Outreach Strategy
I took a very methodical approach to creating an investor outreach strategy. First, I made a CRM (Customer Relationship Management) system to track angel and venture investors and their typical check sizes. I also created a “vibe meter” to measure both quantitative and qualitative aspects of Realtime’s potential fit with investors. I looked at investors’ Twitter and LinkedIn profiles and scored them based on how I thought our personalities would mesh. We also had a section called “connectors” that kept track of people who might introduce me to certain investors.
I broke down my investor targeting by creating lists of different types of funds that typically invested in pre-seed and seed-stage companies. We ended up having 28 funds on the pre-seed/seed list, and 72 angel investors whom we felt might be interested in Realtime. I had about 40 connectors helping to make introductions to potential investors. With so many moving parts involved, a key part of our process was tracking our progress with all the people we were contacting. I tracked things like meetings, pending introductions, successful introductions and connections, follow-ups, why a VC passed on us, who we were waiting to hear back from, and more. I also took careful notes after meetings to have context for later analysis and improve our pitch.
DocSend Startup Index Note:
Realtime’s strategy reflects what our data on Seed-round fundraising has shown: simply contacting more investors and having more meetings doesn’t necessarily equal more funding. Founders should pitch smarter, not harder, and make sure to target investors they might “vibe” with.
Although the vibe meter I created leaned mostly toward the quantitative side of things, it also took qualitative aspects of investor “fit” into account. For instance, if I knew that a given firm wrote $3 million checks and occasionally up to $7 million checks, I could give five stars for a personality fit but only three stars for potential investment size. The vibe meter measured a mixture of how I felt we interacted during our meetings as well as how an investor might fit with our overall fundraising goals.
The Challenges: Being a Black Founder and Staying True To My Vision
Many of the challenges I faced during my raise had to do with me being a Black founder in the Silicon Valley startup ecosystem. I had to balance how people perceived me, how I thought they perceived me, and advice from Black people currently in the ecosystem on what might be possible for me. I came in as a twenty-something dropout trying to build a social network with no revenue. An initial reaction I faced was, “Woah; you can’t raise anything!” I’d hear things like raising $1million was too much, or our valuation was too high. I heard feedback like this from both sides to an extent, Black and everybody else.
There was also the simple fact that people hadn’t seen a story like mine before. When Michael Jordan left UNC early, people didn’t know whether he’d deliver on his promise, either! I already had tastes and opinions on product and execution, and I had proven I could follow through on an idea. But now, I had to learn how to execute within a plan that I didn’t fully control. I had to take in all inputs of what I think people think about me, what Black people in the ecosystem think I can do, and what others think I can do. I learned how to take in all this external feedback while still remaining true to my own vision and sense of taste. I think this was the biggest challenge for me.