How hard is it to get VC money during a drought? We spent 6 months following startup Yoodlize as they tried to raise their seed round
Summary
Yoodlize had just opened a seed round two weeks prior, and the founders were aiming to reel in about $3-5 million in capital to expand into five new cities in addition to Salt Lake Citya goal that, coming off a record two years of venture funding, still felt within reach. Fairbourne had come to initial agreements with investor David Card, who runs a Utah-based consulting and investment firm called Alpine 100 that works with local angels, VCs, and private equity firms, who had expressed interest on behalf of Wyssling and who would be personally managing the investment.With funding materials still with lawyersFairbourne went ahead and paid out of pocket to fly off to Hawaii with three others (including his two sons) for a two-week trip to try to open a new market on the island of Oahu.Its going to be like my college days all over again, Fairbourne told his team during Yoodlizes weekly Thursday meeting, right before he flew out, mentioning how the four of them would be sharing a one-bedroom condo for the two weeks. But back in Utah, the funding round was taking a long time to closemeaning Yoodlize didnt have the capital to pay for the advertising it needed to build out a supply base and reel in the customers who would rent the Airbnb owners items.The holdup would ultimately last around two months. A rather unusual ask in a funding roundthe term sheet requires Yoodlize to implement management procedures laid out in the book Traction by Gino Wickman.Fairbourne says that, for a company still pinching pennies, the legal fees were high, and the valuation was a couple of million lower than what the team had hoped for initially.The stuff they were pushing for and askingI wouldnt normally do this, Fairbourne says. I think well play it out and assess every quarter, Fairbourne says.In the meantime, Yoodlizes team members are putting their own money and time on the linehoping that venture investors will eventually commit to writing bigger checks, and that the company will start to take off.