Inside Small Business | Small Business & Home Business Marketing

Angels? I think not!

It was easy to raise the first $200,000 and easy to blow through it. What do we do now? We realized that “Angel” investors are anything but angels. Most of them are looking for companies who are desperate so they can buy shares at a reduced price. We vowed that Card Café was not going to be one of those companies. We really struggled to know how much ownership we should give up to raise money. The one thing we did know was we were almost broke. After countless hours of fundraising to our friends and family, we were able to raise more money.

There are so many questions with angel investors. Am I looking for equity investors or is debt a better way to go? How much stock am I willing to sacrifice? Does the angel offer more to my company than just money? Do we allow the angel to sit on the Board of Directors? How much do we involve him/her in the day to day operations? These are hard questions but must be asked and answered before you allow the investment.

We did pitch to many different angel groups. I am convinced if you talk to enough of them you can find a fit. They are all looking at different aspects of your business and each likes a different type of businesses. There are generally many angel groups in a city.

One method I absolutely loved was speed pitching. If you have the opportunity to participate, you should. This is where they have many angel investors spread out in a large room. You only have a short time with each (generally 5 minutes) angel to sell them on your company.. There are two things I liked about speed pitching. 1) It makes you really search to find the best aspects of your company. You have such a short time to tell a big story, you quickly realize what it is that separates your company from the fray. 2) You get to meet a lot of great people. Most of them won’t invest but you have been able to peak their curiosity about your company. Who knows if that will lead to something down the road.

There have been a few angles who are willing to help and seem to have the best interest of the company at heart. We have allowed one such angel to invest. It has been a great situation. We did appoint him to the Board. His business knowledge has been invaluable. He gives great suggestions and is quick to let us know when we do things he does not think are in the best interest of the company.

The bottom line is that angels are sometimes a necessary evil. When you need to include them, look for those that offer more to your company than just money and those that will give you a fair valuation.

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Stay Focused. Be Flexible.

Understand that your business, your product, your marketing, even your life won’t turn out the way you planned. I think one of the big challenges with a start up business is, knowing whether to act on a new idea immediately or put it on the shelf for later. The problem is, some great ideas can take you away from your focus on your current goals. New business owners can hop from one suggestion to the next, making significant changes after getting the company started. This wastes time and creates additional expense that you need to avoid. Ask yourself, “is this new idea or suggestion helping the business to reach it’s goals or diverting valuable resources away from these goals”. However, once in a while, an idea or suggestion comes along that must be embraced and acted upon immediately. Your minds and plans must be flexible enough to make those critical changes.

So stay focused, be open and plan for some changes.

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Great idea…no money!

Teague Bengtzen, President

www.CardCafe.com

Once we had the idea of online greeting cards we could not sleep! Every morning we would meet with new ideas, “What about the printing the sender’s return address?” or “What about being able to schedule cards to be sent in the future?” or “What about offering gift cards and chocolate and gift baskets?” or “What about letting the customer upload any amount of photos they want?”. The idea was the easy part. Now what do we do?

It was determined that Card Café should be a global business – chipping in a few thousand dollars here and there would not cut it. We needed big money. We started going through everyone we knew. We were sold on the idea, now we had to sell them. We found it was not hard to raise money because we already had the experience and equipment (we owned a printing company) AND the idea was something everyone could understand and see the need for. $200,000 seemed like a lot of money so we set that as our goal. We burned through it in a few months. Raising money was one of the most time consuming projects for the first 2 years and it is NO fun!

We found having samples of the product to show our friends and family made a world of difference. People have a hard time visualizing what “could be”. We also found that asking for small amounts like $20,000 increments made it much more appealing to people. Also, many of the people we spoke with wanted to know what our exit strategy was - people want to know they can expect a return in 5 years or less.

A word to the wise - whatever amount of money you think you need – double or triple it!

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Meet Card Cafe

Hello, my name is Dave Miller. In the spring of 2004 myself and my partner Teague Bengtzen were busy running a busy commercial printing company. I had an idea and met a friend at his house to get his opinion on my idea. This meeting with my friend Dwayne sparked a completely new and different idea. As soon as I arrived back at to the office, I walked straight to Teague’s office. I explained this new and very raw idea. This big idea was to creating a web based application, from which consumers could select from a collection of greeting cards, or create their own cards by uploading their own photos, then personalize the card, enter the recipients address and their return address and then we would print and mail the card for them. For the next few days Teague and I were constantly in and out of each other’s offices expounding on the idea. We almost wore the carpet out. From this Card Café was born.

Almost immediately work got underway to develop a system in which we, and others, could leverage the advantages of current technology, while always maintaining the personal and intimate nature of real paper traditional greeting cards. Card Café partnered with industry leader, Kodak, to acquire the digital technology to make this happen, then developed an industry leading web site. We also, immediately began to raise money to fund this new venture. We contacted as many friends and family as we could to get our first round of funding. Raising capital was new to both of us and although we made several mistakes along the way, we obviously raised enough to move forward. We will talk more about our failures and successes of raising money in the coming weeks.

Today, Card Café is a leader in the online greeting card industry. Card Café gives customers the ease and convenience of shopping for real greeting cards and gifts from their computer without the hassle of spending unnecessary time at a store. In addition, our company gives customers the ability to add gifts to the cards and schedule all their greeting cards at one time for a year in advance. Card Café is still a very young company, we have experienced several bumps in the road, and we have had to improvise, adapt, and overcome. We are currently in growth mode and working hard on our business to business sector. Teague and I look forward to sharing more about our journey in business in the coming weeks.

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