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The founders of this user onboarding startup didn’t know anyone in the Valley. Here’s how they raised almost $2 million anyways.
Startup accelerators are a golden opportunity for raising capital. With unicorn success stories like Airbnb, Dropbox, and Twilio, Silicon Valley hit factories Y Combinator and 500 Startups receive more and more applicants every year.
From TechCrunch coverage at demo day to meeting with famous investors and entrepreneurs, accelerator-backed startups have the benefit of the right people’s attention. YC and 500 can feel like a silver bullet. With just one acceptance email, you’re connected to the top investors and entrepreneurs in the Valley. Hundreds of doors are opened for you.
So when Pulkit Agrawal and Brian Norton’s startup user-onboarding made easy software Chameleon was rejected from both YC and 500, they didn’t know how to open those doors. For some founders, the prospect is so daunting that they flat out give up after getting rejected by accelerators. Without easy access to investors, it’s not worth the struggle.
Still, the cofounders managed to raise nearly $2 million last summer, without knowing anyone. Here’s how they did it.
Y Combinator Isn’t the Only Route
YC is a well-worn path to getting your company off the ground. But it’s not the only path–it’s just well-lit.
As the Chameleon founders know first hand, it can be hard to keep that in mind after getting rejected. As Pulkit says, after getting rejected from YC and 500, “We were scratching our heads trying to figure out what we should do.” There’s no obvious next step to take.
They started by exploring other routes to funding and attention from other people–even ones they weren’t particularly excited about.
- They finally accepted money they previously raised from friends and family. Prior to applying to YC and 500 startups, they had asked some family and friends if they’d be willing to commit some money to the project. They hadn’t accepted it yet, but it totaled to about $50,000. This gave them the time to devote to the project that they really needed to build out a product.
- They participated in the inaugural episode of The Pitch, a Shark Tank-like podcast where founders pitch to investors. Advice on their pitch from investors like Sheel Mohnot allowed the team to hone their value proposition for when they pitched to investors later down the road.
- They considered attending a third, not well-known incubator. It wasn’t their top choice, largely because they wanted to wash their hands of incubators. But at that point, when someone asked if they wanted to meet with the new incubator’s founder, they were willing to take the risk.
By trying a bunch of different things, they were able to see what stuck. As it turns out, these small plans set the wheels in motion for huge success. They just didn’t know it yet.
The Flint to Light the Fire
That investor who was starting an incubator turned out to be the prolific angel investor Auren Hoffman, who had just exited as a founder of LiveRamp. By that time, Chameleon had a working version of the product, and had received feedback from beta users to start improving it already. Their friends at Amplitude were already using Chameleon to create better user onboarding for new customers.
Auren was incredibly excited by the product. As an expert in the SaaS space, he knew a lot of companies facing the pain point that Chameleon solved–companies needed better codeless user onboarding.
Auren was so gung-ho about their mission and product, he wanted to help them raise an angel round.
Meeting Auren and getting him excited about the project turned out to be the flint that lit the fire. Together, they strategized about how to raise around $500,000. Auren suggested they don’t go after big VCs like True Ventures just yet that invest $1 million or more. Pulkit and Brian were on a meeting circuit all week with people Auren introduced them to, and doing between 8 and 10 meetings per day.
Within a week, they had closed almost a million and were actually turning away funds.
Auren typically writes $25,000 checks for angel rounds in SaaS companies, but had pledged a lot more to Chameleon. His interest in the product made people do a double take, and realize that if it was something Auren had so much faith in, perhaps they should take another look.
Embrace the Domino Effect
YC may seem like a silver bullet that puts everything in place for your startup to raise money and succeed. But it turned out to be the littler actions they took after being rejected that led to their success.
Pretty soon after Auren’s initial investment, investors were approaching them. In fact, True Ventures reached out to say that people they respected had invested in Chameleon, and invited Pulkit and Brian to attend True University, an event they host at Stanford every year.
True University turned out to be their self-made demo day.
Brian and Pulkit met with True Ventures, who told them “We trust our sources, we think the product is great, we’d like to come in at whatever you’d have us for.” It was the kind of reaction they thought would only happen if they had gone through an accelerator.
There were a few main actions that put this result into place:
- Accepting money from friends and family gave them time to finish working on the product.
- Going on The Pitch allowed them to hone their pitch and learn what investors (like Auren, eventually) were looking for.
- Meeting one angel investor who was really excited to take on the project.
Rather than a single action that led to their success, it was actually a series of events that helped Chameleon raise funds, and eventually land a TechCrunch headline of their own.