Today, we speak with Sam Lundin, Founder and CEO of Vimbly, a site that helps you discover and book any activity in NYC. Vimbly recently raised $540,000 in seed funds from 10 angel investors. Lundin shares his thoughts on the funding process.
What was the funding process like?
The capital raised was an ongoing process that spanned several months. Aside from the financial backing it yielded, it was a healthy experience in that it forced us to effectively articulate the business model and provided great feedback as to the weak links that required more attention. Investors were aggressively vetting the business (as well as traction we could point to), but more importantly, they were judging the team we had in place and how well we could respond to what would undoubtedly be a rapidly changing environment. Humbly, we were choosing the appropriate investors as well, and turned down capital when it did not seem like a natural, long-term fit. The way I see it, there are 4 types of investors that would be applicable:
1. Friends and high net worth individuals (passive in nature, but only commodity money).
2. Sophisticated investors (folks with an investing background who will ask appropriate questions and have good networks, such as tech-focused hedge fund/private equity investors).
3. Technology folks (e.g. employees in the tech industry with applicable knowledge to contribute).
4. Traditional angel/VC investors.
Moving along the spectrum from category 1 to category 4, the investors become more helpful in terms of what they provide aside from just cash (and they will be more activist in nature). We sought to raise a mix of the above, but avoided any family contributions. Fortunately, we have a fantastic group of investors with us that we’re quite excited about.
What are the biggest challenges that you faced while raising capital?
Ascertaining who was “real” and who was not – in a quick fashion. Worse than a “no” was when someone said, “Sounds great,” but was secretly a no, since this required incremental time. That time would more optimally be spent on finding more “yes” folks. Over time, we learned that asking better questions on our end would help weed out those who weren’t truly interested.
Another challenge was balancing the time spent on capital raising vs. moving the company forward. Raising capital was a massive time commitment – an acutely noticeable one when there was already 30 hours of work we wanted to get done each day, but couldn’t. The best way to navigate around this one for us was to trust each other to do our jobs and not channel too many different people into the fundraising effort.
What factors about your business led your investors to write the check?
1. Scalable platform (this comes down to a math problem based on customer acquisition costs and lifetime values of those customers).
2. Data (not just anecdotes) pointing to the value-add to both sides of the platform (users and vendors).
3. Confidence in the team based on a track record of results that would be applicable to the business.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Focus on traction first. Many brand new companies first come up with an idea, then want money, then want to prove it. But, the more they can prove the idea holds water before focusing on securing the money, the easier it will be to raise funding (and recruit investors/employees). Before getting started, founders need to prepare an honest runway to prove initial traction. If you try to raise without that traction, it becomes much harder. We did not begin seeking external funding until a year after we got started.
Where do you see the company going now over the near term?
Our plan for the second half of this calendar year is to expand coverage to include 5 major metropolitan areas (e.g. Boston, Washington DC, Chicago). The capital we raised will help us scale to establish relationships with those local vendors.
In the meantime, on the product side, we are focusing on improving the strength of the activity recommendations that users see on the site. In other words, if you come to Vimbly and see 5 pole dancing classes at the top, you might never want to come back again if you were looking for car racing. And, even if you were looking for pole dancing, you might not want to see 5 of them right away. Thus, what we show you, at what time, in what order, is highly impactful on the experience you have using our site. Our goal is for a user to feel like, “This site gets me,” as quickly as possible in their browsing experience. To do this, we learn from what other, similar users preferred, and then apply that to people who match the same persona. We continue to work on our version of the Netflix-like algorithm, which we internally refer to as the “Coolness Algo” (sigh, I accept blame for that name).
Vimbly is a site that allows you to search and book for all kinds of recreational activities from cooking classes to glass blowing to white water rafting. Activity information is easily displayed according to location, prices and availability, and neatly laid out according to time and date.