Friday, July 02, 2010

Storm Before The Calm

"Keep calm and carry on" - from a friend's g-chat status.
The past few months have been tumultuous, to say the least. While I was feeling a bit stressed out after coming home from work for this extended weekend, it was a perfect reminder at the perfect time to log onto my e-mail and see that line sitting there.

A year ago yesterday, I started what was to be a dream job, of sorts - a start-up company, with a successful CEO who had already built a company from nothing into a nationally recognized success, the ability to raise capital easily, and an expansive, exciting idea. The difficult piece would be creating a strong business or finding a successful product that we could market, but with the cushion of capital and the experience available to us, we would be able to pull it off.

Or so it seemed. As the months went by, projects would be started - but not fully funded. Money wasn't available when it needed to be. Employees became cynical as rumors started to circulate, and slowly, things seemed to head downhill, though we would seem to get "saved" just as we were on the brink of complete frustration each time.

And then, we stopped getting saved. Shortly thereafter, we discovered that the prior "success" of our CEO was questionable at best, at worst, criminal. (He immediately became our ex-CEO.) Money we had raised was gone, likely never to be recovered. Suddenly, we were all living on a prayer.

After a couple of days of feeling bad for ourselves, we had to refocus and move forward - or shut down. And the decision was extremely difficult: Our money was gone, and the constant promises to pay us back the money we were owed were completely empty. On the other hand, while originally we had looked to find a product to sell, now we had created a product (actually a service) that was not just successful - but replicable, and viable for sale. We had lost our cushion, but we had something real.

We decided to move forward anyway. We had to make the extremely difficult decision to cut all non-essential personnel - resulting in the layoffs of about twenty-five people, including some very close friends (one sang me down at my wedding, another was in my class in high school and was my roommate at one point in Israel) and all of them good people. We were able to raise just enough money and work hard enough to get out our corporate filing just in time, put together a fantastic business plan, and have recently started presenting it to potential investors, with even more positive feedback than we'd hoped. (In a funny twist, one commented almost angrily that our projections were "too conservative" and that we should "up them". On a similar parenthetical note, every single one of the vendors whom we work with on our branding, technology, software integration - and so on - have expressed their belief that not only will we raise the money, but that we have a "tremendous business model" and will be "a great success". Their patience and support has been incredibly encouraging and nothing short of astounding.)

Raising capital is possibly one of the most stressful activities a person can do. Even when you know (as well as anyone can "know" anything) that what you have will be successful, getting others to believe the same is difficult in a world where people are raised to be rightfully skeptical. Thankfully, our model is clear and straightforward, and we were in a way surprised at just how many people who are investors, even those not in our field, who came over to us at a conference to congratulate us on what they believed to be a strong model and wishing us luck moving forward. We are now in the midst of discussing potential deals with investors of all different backgrounds, each bringing different structures and different potential assets, whether franchising experience (we're developing a franchise), chemical background (tying into a proprietary product of ours), financial experience (for advisory purposes), or other skills to the table which can work strongly to our advantage, and hopefully we'll either combine pick the ones that work the best for us both in the long-term and for now.

Until it happens, though, it's quite stressful - as one of our partnering vendors said, "I've had to raise capital before - it always takes just a little bit longer than you want it to." Amen.

Keep calm and carry on - or as my sister-in-law likes to say, "Let go and let God." Good advice.

Time to have a relaxing Shabbos.

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