Ask A Founder: Startup Lessons Learned from Work Truck Solutions’ Kathryn Schifferle
Kathryn Schifferle, Founder and CEO of Work Truck Solutions, turned being a woman in work trucks into an oversubscribed $2.1 million round.
We sat down with Kathryn as she shared what her fundraising journey was like, the startup lessons she learned, and her advice to fellow founders, especially women. Here is what she had to say:
HK: Tell me a little about Work Truck Solutions. How did you come up with the idea?
KS: I was publishing a professional magazine in the work truck industry, when it became apparent that the industry had challenges, the greatest of which was the lack of final data on a finished truck. For background, a truck has two big parts – a front end and a back end – typically not manufactured by the same company. Once a truck was finished, no one was keeping track of what that vehicle had become, and so you couldn’t search and find a finished vehicle online. At first I couldn’t believe this was the case, but then I saw it was a big enough problem that a solution had to be provided.
What is your background? Have you ever started a company before?
I am a serial entrepreneur. I started six different companies before Work Truck Solutions, and had actually not planned on starting another. However this challenge was so big and complicated, and just so darn interesting, that I was pulled into it once again.
Did you do anything differently this time around, it being your seventh startup?
This was a different kind of startup for me. Rather than being passionate and compelled, I was slow and methodical. I had the mindset that if it’s meant to happen, it will, which made the entire startup experience incredibly unique. And fortunately, it worked amazingly well. In fact, internally we coined a trademarked phrase for when the right thing happens at the right time with the right people: truckma.
But, I believe that a lot of our good fortune has to do with the way we approached this opportunity. With my previous ventures, I saw an idea and decided I was going to make it happen. I would press, push, leverage and beat my head against the wall. My attitude then was very different. It was all about convincing people I was right. This time, I saw a complex problem and felt I owed it to everyone to listen to their side and need. It quickly became apparent how this solution could help everybody – all stakeholders – in different ways, and I felt it was my responsibility to respond to the market situation. It was much more collaborative which really created an environment of trust. And because of that, I was able to use a fundraising technique where people I liked and respected introduced me to people they knew and respected.
What has been your fundraising journey to date?
When we started the company in 2010 and were just a prototype and an idea, we were all internally funded. Then in April 2012, we raised a seed round of $400,000 from local friends, family and professional acquaintances. We used the investment to take the prototype out into the market and run it up the flagpole. We discovered that it needed major adjustments, so we took that feedback and launched with a much improved product in January 2013.
In the middle of that year, I realized in order to scale we needed to raise another round of capital. However, the deal we were working on ended up falling apart because our deal lead changed in the middle of negotiations. Then in 2014 we went through a really rough period where we didn’t know how much longer we were going to make it. Fortunately, I found a couple of believers who were willing to do convertible notes. That gave me what I needed to hit the road to try to raise a Series A round for $1.5 million.
When I first went to Silicon Valley, there were two negatives to our situation: Number 1. I’m a woman, and Number 2. it’s work trucks. Not very sexy. Then, I was introduced to Golden Seeds and suddenly I had two advantages: Number 1. I’m a woman, and Number 2. it’s work trucks! Very different from their typical woman entrepreneur’s product. So they came on as our lead investor. If you haven’t heard of Golden Seed’s reputation for due diligence, they are extremely thorough. And as a result, it was very time consuming and the round took months to close. However, it was worth it in the end because after presenting at all of the Golden Seeds locations, plus others, we ended up being oversubscribed at $2.1 million.
In addition to Golden Seeds, we had a number of other angel investors in the round from Belle Michigan, Harvard Business School Alumni Angels, North Bay Angels, Sacramento Angels, among others. It is a diverse but very smart investment collection.
Interestingly, Belle Michigan not only invests in women run startups, but also only allows women to invest in their fund. Their goal is to teach and educate female angels. When I went to go pitch them, it turned out that one of the three general partners is from the automotive industry and she completely understood what we were doing.
How did you decide how much funding to ask for during each round?
I really believe it’s a combination of science, creativity and magic. I created a projection spreadsheet that at one point was so huge and complicated we had names for it. I was trying to predict all of the different places I could see revenue coming from. I think that if you are an entrepreneur you should take the time to do develop multiple business models.
And then, of course, the other part was figuring out how much of the company I was willing to give up. I had already been very generous to the people who had helped with the initial product build, employees, etc.
Were you looking for specific traits in your investors?
I like smart money, which I define as people who bring something other than just cash to the table. They must have one or more of the following: knowledge of the industry, connections in the industry, knowledge or connections in peripheral things that might relate to the industry and/or they understand the type of work we are doing (building SaaS).
What has been your most triumphant moment during fundraising?
The Harvard Business School Angels hold workshops where founders bring lunch for three to four investors while the investors provide the founder with guidance and advice. I was driving back from one of these workshops in the Bay Area after two of the investors I had just met with decided they also wanted to invest, when I realized I was going to be oversubscribed.
I am very competitive, and at that moment, I finally felt that people wanted in. People were going to be fighting over the last space, in a sense, and that was a really wonderful, fun realization for me.
What about the worst moment?
The sad moment was when the deal fell through in 2013 on that first term sheet we signed. Even though now I’m glad that didn’t move forward, I was very crushed at the time.
Do you have advice for female founders who are trying to raise money for their startup?
Definitely. I never knew there were groups like Golden Seeds, Astia, or Belle Michigan that only invest in women-run companies. It made a huge difference for me. This sharp group of investors has done a ton of research showing that women-run startups are better at multitasking, they have less ego involved, etc. I would strongly recommend to a female founder to try to get introduced to one or more of these groups because it turns what could be, not always, but could be a disadvantage into an advantage.
What general advice do you have for entrepreneurs just starting their fundraising journey?
First of all, remember investors are your friends. They are not your enemies, and they are not somebody you want to be opposed with. You should always think of it as a collaboration. Unfortunately, I see it happen quite frequently where people get in the wrong mindset about this. A deal should be good and make sense for both parties.
Secondly, I realized when I was pitching last year that there was a sweet spot in my presentation that really started getting investors more interested. It was “My Goal is the Exit.” This is not my first rodeo. I’m older, and my goal is to take all that entrepreneurial pain from before, compress it into a few years, and have an amazing exit. Well guess what. That happens to coincide perfectly with the investor’s goal. So many founders are excited about the product, the customers, the building it, the having it, and the running it, that they forget that if there isn’t a plan for some kind of exit down the road, the investors don’t get their money back. And if the investors don’t get their money back (plus hopefully a lot more), there is no reason for them to invest.
Written by Hillary Keller
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