Since relaunching Realvibez last year, we have been working diligently to secure great strategic partnerships that increased the value of the enterprise and would help to prove that the idea had real potential.
Earlier this year we finally got around to trying to raise some capital, this time avoiding the mistakes of years past – focusing too much on raising outside capital and letting the venture languish.
It has paid off finally, over the weekend we sealed a deal to raise some money at a US$500k valuation from an angel who also happens to be one of our chief advisors. He felt that we had proven our management skills, shown the dedication and were ready to blast off.
Our YouTube deal that will be announced tomorrow also played a significant part in convincing him that we were ready and the window of opportunity had finally arrived.
This money will hopefully be the first of more to come, ideally at a higher valuation, and most importantly, helps to boost our confidence.
When no one believes in you or your business and so won’t give you money, it is a little hard and you have to convince yourself that you are doing the right thing and they just don’t understand. Everytime we have been turned down in the past, we asked the potential investor the following question:
“What would it take to get money from you?”
The answers were always used to refine our business model, executive summary, financial projections, presentation and the running of the venture itself. That has finally culminated in raising some money from an angel investor and should make it easier to raise more capital as needed.
The capital won’t change much though because we are going to deploy it slowly and strategically. Most entrepreneurs don’t realize that there is such a thing as “too much money” and it can lead to immense waste or spending too quickly.
We will continue to bootstrap and deploy our new capital slowly and deliberately, focusing primarily on cash flow. Rushing to spend the money is not the best thing to do and our years of struggling have taught us how to execute with little capital.
The really nice thing about the new money is that we have 6 months of operating cash which takes a little pressure off the team. None of us will be relaxing though as we want to grow the revenues quickly and responsibly.
Without the right EBITDA (earnings before interest, taxes, depreciation and amoritization), we will never hit the valuation we want for our next round – US$2.5 million (we do care about cash earnings as well and some investors will ask about that).
One final note: A few people have asked what it feels like to know that my ownership stake is now worth US$200k on paper and I simply say that what is on paper is of no relevance to me because the value of the company is only what someone else will pay for it, not the valuation we managed to raise capital at.
I can’t spend paper and it can’t pay the bills.