Why we didn't take VC funding after talking to 30 VCs
We started Welder (a tool to easily record the remote interview in high-quality) because we thought it's going to be the fastest way to build a sustainable living out of our own product.
We want to be our own boss. We want things to be how we feel they are right. We want to have the freedom to work day and night on things that we find interesting and to delegate things that we don't like doing.
After the validation phase that took us a month to gather enough data and insights from users that signed up we started developing the MVP.
2 months later the MVP was ready to be released to the public for early access.
Boom, the demand was huge and we were rich enough to go to the beach and take a drink. Haha, I wish.
The demand was actually pretty cold. To make it short, the biggest feedback was that Welder needs to be in the browser.
We spent another month on rewriting Welder to be browser-based.
Boom, the customers started coming in. Not that many though. The financials were not in our favor and we recognized we couldn't make a living out of it.
Just like that we decided to look for funding so we could spend another full year deeply focused on finding the right product-market fit that could be scaled like hell.
I’ve done so many investor calls in just a few weeks. Even THE Sequoia capital got in touch with us.
But we had an issue closing the pre-seed round.
Investors loved our team and its past experience. They loved the idea of Welder, but they were not sure about our intentions of what we actually want to build.
And that's because our intention was never to build the next unicorn (a company that reaches a valuation of over $1billion).
We started because we wanted to create a sustainable way of living. And it was impossible to transfer that intention into something that we don't believe in.
And investors noticed it, of course. They were hesitant. They need that a lot, it's how the math works. 1 unicorn to cover all those other 100 companies in their portfolio costs.
And even if those 99 companies (probably even more) fail they need the intention and commitment to become a unicorn and build a world-changing product from every one of them.
So we stopped the fundraising attempt. And believe me, I don't judge the "VC way" of doing business. It's just not for us. Not right now.
Welder ended up in a challenging spot. We don't have enough resources or time to develop the broad tool that will allow everyone to record remote interviews from anywhere in the most reliable and efficient way.
But we also don't want to lie to VCs that we will build the unicorn for them and we certainly don't want to lie to ourselves.
Where does that leave us though?
We figured we need to scope Welder a lot. To find a niche in which we are going to solve a big problem from start to end. In which Welder becomes absolutely essential. The niche may be smaller than every podcaster who needs to record remotely. But it’s a niche we can connect with deeply to understand the problem well, to know how to target the audience, and to become a game-changer in people's lives.
btw. if you are curious about the journey check crazymonkeys.io. We share a lot of our resources and assets that help us along the way.
I love your story, your product, respect your entrepreneurial journey so far. That’s a strong mindset many indies should learn.
One feedback. I think the subject line of this post is slightly clickbait-ky. Did Sequoia ever jump into a DD / term sheet stage with your company?
They’ve no interest in the way you grow the company but also no offer, right? Hence it’s hard to tell if you had a transactional conversation with them.
Not saying it’s wrong. I enjoy reading tho. But would be great if the subject line and the content aligned :)
Other than that. Great product. All the best!
Thanks! It's true, there was no transactional conversation with them.
But each of the talks made it more clear to us what is it that we actually want at this stage of our lives and with Welder.
It was a big thing when Sequoia decided to get in touch without us reaching to them. It made my day, more than one day actually. The call was important for us. Thus I am proud to mention it. But I really can feel what you mean and it could've been written without their name.
I am just a proud little fellow. Again thanks for the honesty!
I really your second line.
It would be great to hear from you again about things like: “Why you decided not to raise capital from VC after X conversations” - I think it will help a lot of indies who can’t make decision or have no idea how to talk to investor.
I will do the same. I can imagine if Sequoia reach out to me years ago. I would probably made my day, week or month.
You’re welcome. I just wanna be candid. I’m just a little concern how’d people associated to Sequoia think about what you write. Not a big deal actually.
YC receives 150K applications and Techstars got 60K applications every year. And many prominent VCs receive uncountable applications. Can you imagine these founders create an article and say hey, spoke to YC, decided not to take their money etc...
Yes, we often see article like this. Every year. It would be awesome to focus on the context itself, instead of borrowing a brand name.
My bad if I say too much. Thanks for understanding 🙏🏻
Thats crazy, what are you guys doing now?
Welder is actually in a kind of a sleep spot for now - at least on the development side. We need to explore more how to pivot it so it's more powerful for its original vision - helping guys like us, create that has impact content easily when sitting home (this is how we use it https://www.youtube.com/channel/UCFY-lrzERg_BvpL9NdY9qxA)
For that, we need to focus on more research and validation. Right now it has $1500MRR and slowly growing. But we need to pivot.
So right now we push CrazyMonkeys, working on 12 projects in 12 weeks so we build noise and awareness about us. That allows us to generate the cash we need to stay independent.
It's tough, sometimes it's pure chaos. For example this week haha, complete chaos. But it's beautiful. We meet many great people and learn many things!
Insane work ethic. Love all your little projects! Which has been the most profitable so fra?
Thank you 🙏 appreciate that a lot! LastMile.studio is doing pretty well so far :)
Nice any revenue numbers that you can share? Seems like YouTube is all about shorter pieces of content from longer interviews.
It was an accelerator to truly figure what do we want at this stage of our life.
I'm glad we had such strong opportunities and manage to think with our belly 😃.
Have you tried talking to funds like Tiny Seed or Earnest Capital that provide funding for bootstrappers and indihackers? Might be a good fit for your situation.
We thought about those a lot. Tiny Seed actually funded SquadCast which is our competitor.
The main reason why we decided not to go with these is that we knew that for such a general idea of "High-quality remote recording from anywhere on any platform" we would need a big pile of cash to outrun the competition and capture good amount of market. I believe in this general market, the best solution will take 95% of it.
But these are definitely on our radar to look at when we manage to scope it to a niche where less capital with lower goals would really make sense.
I see. In this case I think your decision to target a niche or specialized use case is the right one. I agree that you can’t lie to yourself and try to be something you don’t want to be.
Good luck!
I'm so with you on the unicorn vs lifestyle business!
Did you consider other funding models like TinySeed offers?
What happened between you decided to get funded and started receiving so many investor calls? You're not in the U.S., and you don't have significant revenue yet, was it some clever trick, or just because remote video was so hot?
Also, offtopic, but it would be very interesting to know how you validated the product. I mean, we all use Zoom, what is so painful about it that we would switch to another remote video tool just for interviews?
Best of luck with your project. I hope you'll find some local angel who would give you enough boost without turning you into a slave to your KPIs.
We did consider models like TinySeed. Quite a lot. But we decided not to go that way as we knew products like Welder would actually need a huge amount of funding to succeed in the current form. And even that was kind of wishful thinking.
But maybe in the future as we pivot it will make more sense. I like those models tbh.
Actually, our validation process is quite refined now. We will shoot in-depth video about it and post it to our channel (https://www.youtube.com/c/CrazyMonkeys/).
But here is a short overview:
That's very impressive, thank you!
Johan, took a look at Welder, and wanted to share a few thoughts.
First, the initial copy on your home page really did capture my attention in the first few seconds. But then, you lost me. Here's why.
The video you're playing on the homepage is not doing a good or compelling job of showing the difference between recording on Zoom vs recording on Welder.
In fact, I was watching it, and it took me at least 5+ minutes to figure out that the video was showing roughly the same video content, but recorded with two different tools (Welder vs Zoom).
Then, after I figured it out, it was a bit hard for me to see the distinction of quality while the video was flipping back and forth between Zoom and Welder. I'm running on mini-pc, two 32" HD flat screen TVs as my monitors (connected via HDMI) -- and it was still hard to see the difference.
Once I took screen captures of both \<- link to screenshot\, and showed them side-by-side, I saw the difference, and then it was more clear what the difference was.
TBH, the 'comparisoon-p-1080.jpeg' you have lower on the homepage is MUCH more compelling than the video (IMO). You see the difference clearly & quickly.
Maybe that should be the Hero image instead of the video?
As for positioning Welder moreso for doing HQ video interviews, I don't really get it.
I use Zoom a lot, and sometimes am recording interviews. The quality of Zoom seems just fine to me for that purpose. Granted, I'm sure there are some people who may want higher quality video interview recordings, but that seems very niche -- which isn't good or bad.
The other question that came to mind is what prevents Zoom from doing whatever Welder is doing to deliver higher quality audio & video content? I'm not exactly sure what Welder is doing, but I would suspect that Zoom is smart enough to figure it out. Maybe I'm wrong.
Definitely was intrigued by the idea of using my smartphone as my camera on my PC (because I don't have one currently), but then saw all the requirements to get HQ video/audio using my Samsung Android, and felt there were too many obstacles (especially needing to download a paid app from another provider to get HQ video?)
All that said, I do believe there's a good market opportunity for Welder with some positioning changes, information presentation changes, and removal of some of the obstacles I briefly mentioned.
Hope the feedback helps. LMK if you have any questions about the info above.
Mike! Thanks for the time you took to take this feedback! We already went through it several times assessing what we should change now.
I personally (as the one who is designing and coding the pages) agree with most of your feedback.
We are just in the phase where we decide if we want to invest more time and energy into the current form of Welder or we pivot Welder to a bit different audience for which we will need to overwhelm the page completely.
This is actually still the version of the page that we used to validate the product 6 months ago and was done in one week.
Again thank you so much for this!
Happy to help. Would love to see you guys succeed.
I think ending up in an awkward position like this and having to solve the dilemma really forces you to evaluate what you actually want to accomplish and want from life and your business. Hindsight is 20/20, some of the decisions will always end up being wrong but you won't ever find out if you don't take the necessary steps.