May 08, 2023
On Failure to raise venture and build a sustainable business
10 min read
In december 2020, I left my job at Tyk to work on what I thought would be my life's work. I never had clarity on what I was going to launch until 7 months later. I just knew I wanted to do something in the crypto space considering my experiences with Wise. In July 2021, we wrote the first line of code for fludicoins.
unrelated and back to this, Wise has my account closed/frozen/locked again for weeks now
With all honesty, unlike many others I never at any point thought Fluidcoins would be a billion dollar company. Everyone I spoke to I kept on hammering we'd most likely end up selling to some bigger Fintech player or someone else in the space over the next 4-6 years as crypto utility picks up and more orgs want to get in . That's exactly why we were focused on businesses. As it's hard to build a fintech app in ( west ) africa without having FLW in your stack, that was exactly what I was gunning for with the company. Should be hard to build crypto products without FC.
First thing first. On Media
Before I get started, there was some article in the media and a bunch of discussion on Twitter about how we had sold the company without informing investors amongst others. Even though there have been rebuttals and corrections by the said media company, I guess it is important I keep this here for posterity sake.
The first time I mentioned to investors we had no more option than to sell the IP or shutdown and write to zero was in November 2022. And I kept them updated on progress and offers we got. Prior to this, for 5-6 months before this, I have been posting updates on our financial situation.
Which most people already did by the way.
we did leave out a party due to the public nature of updates.
While I tried keeping everyone people updated as much as possible. Without any doubt, I still failed by undercommunicating as that was a critical moment and it meant there was nothing like overcommunication.
Pretty also important to note the following:
- I have made $0 from all of this.
- I have not relocated. By the way, I can whenever I consider it the right time to do just that.
- I am no longer at the company ( for quite sometime )
- No, I cannot invest in your startup. Stop sending me pitch decks, I am most likely poorer than you are.
Around March 20th 2022, I met Tope somewhere in Ikoyi. He then tells me about how crypto has been hot in Dubai, and an upcoming Binance crypto event that would be attended by virtually every top fund/company in the space globally. We both thought and agreed it would be a great way to fundraise.
March 25th, I got my UAE visa, bought my flight tickets, booked an hotel and paid for the event tickets that same day. I flew on March 27th to the UAE to arrive just in time for the first day of the event ( March 28th ).
literally just landed and waiting at the reception so I could check into my room, drop my bag and head to the event.
The event described above essentially kickstarted our Pre-Seed fundraising for Fluidcoins in March. We ended up barely raising $50K throughout 2022.
Literally every single week in 2022 felt like we were going to die the next week. Yet I kept pushing strongly, trying to make sure we served our current customer base, onboard new ones and everything in between.
Trying to keep the team motivated was hard. I tried to keep the team really lean, the workload on everyone was so massive I'd occasionally step in to force teammates to go on a break and go off the grid for 1-3 days.
2022 was really really brutal for the company in so many ways. We couldn't raise money. Everyone we spoke to was either already or going to be invested in a competing product or it was nice product, but too early. But we kept running things smoothly as much as we could.
We'd end up working with some leading fintechs in the country and lose them because we just couldn't keep up with the scale they operated at. Made a few mistakes here which ultimately came back to bite us really hard. We took on way too much we could chew but it was a way to get our metrics up to increase our changes of getting capital.
We couldn't afford marketing. We couldn't afford ads. We couldn't afford hiring. We couldn't afford a shit ton of things. Every extra $ we spent throughout 2022 equalled a zero sum game - something somewhere else suffered. As an example, A marketing team member left in August and instead of replacing her, it meant it was an opportunity to save on cost, get some more critical subscriptions or tools for others on the team while managing the extra workload
I'd periodically try to save costs on services by signing up with new emails all the time to keep costs low or get that one time signup bonus applied so our costs could be low ( Thank you iCloud hide my email ). I think some how one of the SaaS products eventually connected all our accounts together and banned us till this day, they probably did that by matching the name on the card ( my last name ) or some other heuristics. Who knows?
It got to the point where a running joke at the company was don't worry when we raise
Teammate A: We need this tool so badly. It's $10/month for an upgrade
Another teammate: No worry, lanre go sort am when we raise.
Running an early stage startup is very hard. It's probably easier when you are early and have cash in the bank that enables you to go heads on solving a specific problem over X months. I wouldn't know. I spent most of my entire day trying to speak to VCs, preparing documents, building models. There was a timeframe ( a week or two ) we exclusively spoke to VCs from Australia ( GMT+12 ), it meant I had meetings at 3 am - 6 am. In fact I once had a meeting at 4 am and still needed to be up for another one by 8:30 am. Attend standup with the team at 10 am again. And jump on 1 on 1s that same noon. It was brutal. Shitposting on Twitter was the only way to escape all of that.
We ran a very open team at the company. I shared revenue milestones publicly, fundraising updates and struggles publicly amongst others. It was really hard keeping the team motivated when numbers were going up, everyone was working their ass off but no venture dollar came through. I'd occasionally get sent Twitter threads and fundraising annoucements of people adjacent to our space or those that are/were direct competitions.
Exactly 10 months after we first set out to raise ~$300-500K, the following happened:
- our transaction volume numbers was up 700%
- We failed to raise venture.
- Cash in bank got to zero.
- Refused to make a token to sell ( we could have easily raised maybe $350K+ with this at the start of summer 2022) but internally we were not so sure about what a token would mean for us.
- Got a signed Termsheet to infuse $600K into the company withdrawn at the very very last minute. This would have bought some investors out.
- A shit ton of internal crises. X is growing but we can't scale, we need money. We can't raise. Team is overwhelmed, we need help, can't get help. We didn't even hire a customer support personnel until a project at the company ( Flip ) got to ~18K signed up users. A team member and I added customer support to our skillset.
In hindsight we shouldn't have kept Flip running when it started getting out of hand with the user base and operations. But a 10-11% increment to our existing MoM growth was something we wanted to keep for a bit to see if we could still use that for VC
Maybe we weren't growing fast enough to raise money. Growing at venture scale is batshit crazy. Those who have been able to hack this are absolute legends no doubt.
Maybe we weren't just doing enough. Lots of maybe. But we just may never know.
But one thing is certain, we did fail to extract as much value as we created and I ultimately failed as the leader of the coy by running out of monies.
With that said, one thing is certain, I am incredibly proud of what we have built at Fluidcoins, the team I put together amongst others and product we built
Serial entrepreneurship? Starting another company soon?
Most likely never going to do this again! Took a salary just 5 times over the last 18 months. Startups are a lot of risk which I no longer have the apetite for. Maybe it is different when you raise a whole lot of money. But for us, it was always cost-cutting measures everyday. I don't neccessarily like leaving things to the hands of luck and hoping the venture raises enough money.
I do enjoy writing software and building stuff but running a ridiculously low funded company when you could be making your last funding round working fulltime is really sometime :)
I retired my mum in 2019. She is obviously older now meaning I just can't afford certain kind of risks anymore. Another 18 months of no salary might be disastrous for everyone involved . Only very few ( African ) companies only get that financial lifeline to experiment and build a sustainable/profitable company over 3-5 years.
So my focus from now forward would be micro SaaS products with a decent profit margin. No $200K marketing budget or bitching about how you don't have marketing money. Nothing of that. Chances are almost at 99% this will not be venture backable businesses. And that is totally fine
Also to everyone who was on this journey with a Cheque or cheering on the sidelines, I'm extremely grateful and I don't take any of that for granted.
I will also try to write more tiny Angel checks this year from Q3 upwards. It's ridiculously insane how much time that extra $1K kept the bulb on at the company for so long. Every single week all through 2022 really felt like we were going to die the next week