Why a startup with $10M in annual revenue took 18 months to get VC funding – TechCrunch

Back in 2006, Joseph Heller went to China where he spent the next decade learning about the manufacturing Based on that experience he eventually built a startup called The Studio. The idea was to help connect people with a small business idea to manufacturers in China in a fully digital w…

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Although Heller says this year has been difficult for international manufacturing due to the pandemic, he has built his business to $20 million in annual revenue and around 150 employees since getting his A round in 2018.

While Heller, who is Black, says that it can be difficult for Black founders to get access to venture capital firms, he sees it as part of a larger issue of general lack of access for those who don’t have the right connections. “For starters, there are certain people that just don’t have access to VCs.

Heller says he felt he might have lost something along the way because of that. ”I’ve seen countless founders that have good VC connections able to raise $1 million to $5 million seed rounds, with literally no product and just an idea,” he said. “This option was not available to me.

When Heller went looking for funding, he had built the business to $10 million in annual revenue, and he believed that he had a solid enough organization to draw the attention of venture capitalists.

He said because of his struggle and the time and energy he took to keep pitching, it was a great feeling of accomplishment when Ignition finally funded his company. “This was something that I really wanted, and it kind of validated that we did have a real business that was worthy of being funded,” he said.

He decided to build on that idea by creating a company that would make it easier for small businesses to order custom goods from micro factories in China, giving them access to the same opportunities as big brands, but in much smaller batches.

To be fair, it’s hard for anyone to break into this system and present a compelling case, but Heller had built his business to $10 million in revenue.

That idea became The Studio. “We basically ended up building relationships with these small micro factories in China that we trained to run smaller batch manufacturing, and then we built software that enabled these SMBs to place orders with these factories.

While Heller was in China, he learned how to navigate the manufacturing landscape and was able to build up a nice consulting business by helping big brands get goods manufactured there.

He did note that he believed being Black was at least a factor in his struggle to get attention from VC firms. “It is particularly difficult for African American and other founders to just get initial capital to start their business.

The latter was much more difficult to do, and Heller sensed there could be a business opportunity to work with small companies empowered by platforms like Shopify with a way to sell goods online.

That had to count for something. “It was very clear that I was an outsider in Silicon Valley trying to penetrate it, and this was already a $10 million business with a very competent engineering team.

Back in 2006, Joseph Heller went to China where he spent the next decade learning about the manufacturing business.

Everything’s been democratized for these small brands, but the manufacturing piece was still really hard to penetrate,” Heller told TechCrunch.

He added, “If you’re not in Silicon Valley and not in that very exclusive VC club, it’s basically almost impossible to raise money and so that was never even an option for us [early on],” he said.

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