Welcome to another episode of Fundraising Demystified, a podcast where we delve into the untold stories of successful founders. In this episode, we had the pleasure of interviewing Martins Lasmanis, the co-founder and CEO of Supliful. Join us as we uncover the secrets behind their journey in raising capital and building a platform for brands and influencers to launch their own white-label products.
Journey of Building Supliful
In episode five of Fundraising Demystified, Martins Lasmanis, co-founder of Supliful, shares his journey from an electrical engineer to a venture capitalist and ultimately starting Supliful. After successfully building and selling an e-commerce brand, Martins and his team realized the importance of a strong founding team and the need for a business model with recurring revenue.
They identified the challenges in the consumer packaged goods market and created an innovative solution called 'consumer packaged goods on demand.' With Supliful, brands, and influencers can easily launch their own white-label products, eliminating the need for upfront investment, inventory management, and complicated supply chain logistics. By leveraging technology, Supliful offers a frictionless experience for entrepreneurs to build consumer packaged goods brands and generate recurring revenue.
The Significance of a Strong Team and Challenges in Co-founder Partnerships
We discuss the significance of having a strong team and the challenges faced in co-founder partnerships. Martins, who had experience as a venture capitalist, emphasized the importance of choosing the right partners for long-term success. The discussion then shifted to the decision to focus on the consumer packaged goods (CPG) industry and its associated problems, such as the lengthy process of bringing products to market.
Martins explained how their platform allows creators, ecommerce specialists, and solo entrepreneurs to launch white-label products and generate additional revenue easily. The platform taps into the e-commerce supply chain and caters to current trends in the creator and community economies.
Challenges Faced by Immigrant Founders
We discuss the challenges faced by an immigrant founder in the US while launching a product and working with investors and partners. Martins mentions that working with partners and doing sales in Europe is not a problem, as people are more interested in the value they can provide. However, raising funds from US investors for the pre-seed round was challenging due to the lack of network and being seen as an outsider.
Some investors in New York and Colorado were not interested because the founder was not from the US and were hesitant to invest without the founder being physically present. The founder understands the need to prove themselves and build trust, as early-stage investments heavily rely on trust. They believe that overcoming these roadblocks makes them grittier, more resilient, and resource-savvy, leading to a sustainable business. Martins emphasizes the importance of building a healthier business.
The Fundraising Journey and Metrics
Martins shares the journey of fundraising and the decision to go down the venture funding route. He highlights their ambition to build a global company that impacts thousands of lives. They explain the need for outsourced investment to achieve this goal within a relatively short timeframe.
The fundraising journey began with investing their own money and building an MVP to prove the concept's viability. They successfully raised a pre-seed round in the Baltics, leveraging their network and connections. Martins emphasizes the importance of network, connections, and personal credibility in the fundraising process.
They then opened a seed round, facing challenges due to a decline in investor enthusiasm. Despite the difficulties, they managed to secure funding through SAFE notes. The continuous cycle of raising funds on a rolling basis created significant pressure on the CEO. The speaker emphasizes the need for mental toughness and a positive mindset. They outline their plans to focus on building the business, aiming to break even and then raise capital to scale. The current total funds raised amount to over 1.5 million, and the goal is to achieve stability and growth.
Fundraising with a sales mindset
Martins shares their strategy for securing investments and evolving their approach. They passed on some venture capitalists due to regulatory requirements. In late 2022, they implemented a personalized cold outreach process, treating it like a sales approach.
They sent VCs a personalized email with an image of a unicorn drawn by their daughter, symbolizing the idea of building something unique. This approach sparked conversations and generated a pipeline of calls. Initially, the process was tight and critical, but as macro trends and failed leads emerged, maintaining control became more challenging.
Building Founder Relationships and Overcoming Challenges
In late December to early January last year, Martins felt they had momentum in their venture, with potential investors ready to follow. However, they passed on a bigger VC commitment, which became a turning point. Despite this, they made the decision to move forward with the resources they had. The ultimate goal is not just to build a unicorn, but to create a billion-dollar company.
They had a runway until March or April, and a visit to Silicon Valley along with outreach efforts helped secure funding from Diazporta Ventures. This extended their runway and built a solid investor list. The speaker plans to go out for the next round by proving the platform play for Suppleful and integrating the first supplier by the end of March. This will eliminate the need for inventory and expand the product catalog. The focus will then shift to scaling and achieving sustainability. Once the supply and demand elements are in place, the speaker aims to acquire capital for scaling in July or June.
Metrics and Challenges in Fundraising
Martins emphasizes the importance of maintaining relationships with investors even if initial funding attempts were unsuccessful. They highlight the significance of sending regular investor updates, which include detailed financial reports and operational insights.
He also discusses the complexity of their business compared to a typical SaaS model, as they have to manage inventory and track its movement. Additionally, they mention the value of setting milestones and metrics for fundraising, such as month-over-month growth rate, diversified revenue sources, revenue generated by customers, Shopify store installs, and retention rates.
Martins acknowledges that cracking the retention challenge is crucial for sustainable business growth. They highlight that many venture capitalists evaluate startups based on these core metrics to project future cash flows and determine sustainability. Focusing on retention can unlock immense potential by increasing the lifetime value of customers and ensuring long-term product usage.
Current Status and Advice for Founders
The company has achieved a GMV (Gross Merchandise Value) of over $2 million since its launch, with a twelve-month trailing revenue of approximately $1.3 million. The average monthly growth rate is 18%, falling slightly short of the 20% target. They have around 3,500 installed Shopify stores and more than 10,000 registered users. However, the company is not yet profitable.
Martins shares their fundraising journey and metrics, providing valuable insights for founders. They discuss how founders often compare and analyze their own metrics, highlighting the importance of understanding the differences and similarities. The guest addresses some challenges faced during their fundraising process, particularly related to being based in Europe.
They explain that some investors are hesitant to invest in unfamiliar markets. Additionally, they emphasize the need for alignment between the startup and the investor, as investors often focus on metrics that may not be relevant to the startup's business model.
Finding Compatibility with Venture Capitalists
Martins discusses the importance of compatibility between founders and venture capitalists (VCs) when seeking funding. They highlight that some VCs may try to fit a startup into a predetermined mold, asking only industry-specific questions and not considering the bigger picture.
This approach can lead to a misalignment between the VC's expectations and the startup's unique value proposition. It is advised that founders walk away from such relationships as they indicate a lack of understanding and a potential mismatch.
On the other hand, the speaker emphasizes the value of engaging with VCs who demonstrate genuine interest, ask detailed questions, and offer fresh perspectives on the business. These VCs can provide valuable insights and help founders explore new angles they may not have considered.
Challenges of Cold Outreach and Community Engagement
Martins discusses the challenges of landing meetings as a founder and shares a clever approach to overcome them. They treated the process as a sales process and were persistent, leading to fruitful outcomes. However, they also encountered some tough competition. Martins emphasizes that warm introductions played a crucial role in raising the remaining amount of money. While cold outreach initially helped, most of the funding came through introductions from existing investors and an advisor who was well-connected and a strong supporter of their company.
The podcast episode discusses the challenges faced by founders when it comes to cold outreach and engaging with communities. Cold outreach requires a calculated and diligent approach, rather than a spray-and-pray method.
Links mentioned:
Supliful website: https://supliful.com/
Reach Martins on Linkedin - https://www.linkedin.com/in/martinslasmanis/
Reach Martins on Twitter - https://twitter.com/MartinLasmanis
Hosted by Jason Kirby - https://www.linkedin.com/in/jasonrkirby/
Email Jason at jason@thunder.vc
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