The growth of smaller funds has meant that smaller pots of institutional capital are now more widely available. To find out what it’s really like to raise money through a venture capital deal we asked Jonathan Kruger, co-founder and CEO of The Drop, to take us through the six key stages.
We’ve also got comments from Matthew Bradley, investor at Forward Partners, who saw potential in The Drop. Forward Partners is a UK-based investor in startups, supporting the best applied AI, ecommerce and marketplace startups and founders, from pre to late seed.
Kruger: The idea for The Drop was formulated during early 2016. I thought that in order to make a big impact and to truly be in with a chance of changing consumer habits, we would need external funding. Lots of people told me to drum up a small amount of money from a group of angel investors with experience and an interest in tech/fashion/ecommerce.
However, I was keen to not only get funding but also hands-on help, so I considered going down the route of seeking out a value-add venture capitalist – an investor who would not only offer a cash injection but also operational support.
I started drawing up a list of early stage venture capital firms with an interest in ecommerce and experience investing in fashion tech startups at the early stages. Most investors’ websites indicated that they would need to see a £1m run rate in order to invest, but this wasn’t an issue for Forward Partners.
Bearing this in mind, my co-founder Steve and I went to the Forward Partners Live event at the end of October 2016 and briefly explained the concept to managing partner Nic Brisbourne at the end of the evening. He asked me to send some info by email which I did the next morning – a short email with a link to our demo and an indication of what we thought was a huge opportunity to disrupt the fashion supply chain.
Matt Bradley emailed back and highlighted a concern around scalability which I rebuffed at length. He said I should pop along to the next Forward Partners Live event and have a chat with him, or if I was interested, that he would reserve me a space at the next Office Hours pitch day, which was happening later that week.
Bradley: The morning following our Forward Partners Live event, Nic Brisbourne talked to me about meeting Jonathan and highlighted potential interest in The Drop. The concept was exciting as we know first hand that “full stack fashion” can be a great startup opportunity – we had already witnessed it with partner companies Spoke and Thread. The men’s market is still fairly poorly served for style and fit, so I figured that The Drop was worth investigation
To be fair, what Jonathan and Steve were purporting to do sounded a little like witchcraft and I had my doubts about how possible it was (more on that later). Nevertheless, we’re in the business of financing the improbable so I was excited about the prospect of meeting the guys at Forward Partners Office Hours – a session each month when we throw open the doors to Partners House and invite entrepreneurs to come in and pitch.
It was great that Jonathan was keen to attend office hours at such short notice. It showed keenness and pure belief in his idea.