Based upon some extremely relevant and high-quality advice, we are shelving the “seed” funding plan at this stage.
Basically, there is not the appetite for seed funding a pre-revenue startup like Passel in Australia prior to launch. Logistics isn’t particularly sexy either!
Get recurring revenue
Overwhelmingly, the advice is to get to $20k per month in recurring revenue, and then we’ll be in a much stronger position. We have at least two firms who have written this exact advice, and many other people have said similar things.
$20k per month is 1350 deliveries. As soon as we do this 3 months in a row, we figure that’s recurring. Then it will be a case of a much more substantial seed round to accelerate growth and get ready for either the US, UK or Canada, rather than a seed round to start operations.
We should hit this in Feb 2018, and then allowing 3 months to raise, plus wriggle room, means we need to cover until July 2018, although we anticipate being cash flow positive in May/June.
In the meantime, we are going to seek additional angel and family & friends investment.
This still leaves us plenty of equity to play with when it comes to seed and further funding. This isn’t Shark Tank where investors want 40% of the company for $50,000.
SAFE – Simple Agreement for Future Equity
It seems most likely we will raise via “SAFE” or “Simple Agreement for Future Equity” – more information is here: [http://www.viridianlawyers.com/blog/2016/8/24/australian-translation-of-y-combinators-simple-agreement-for-future-equity-safe]
This seems like an equally fair and simple funding tool.
If you want to talk about investing, please contact me. If you know any semi-retired people who made a good bit of money in logistics or e-commerce and are looking to invest $25-50k, please pass my details along to them!
Speaking of investors, I met with a potential investor on Friday, and he asked two awesome questions:
1) What do I get?
2) Is this going to work?
The answer to question 1 isn’t as simple as “just equity”. With early investors, we are looking for people who want to come along for the ride and contribute to the adventure. What they get is the opportunity to influence the growth and scale of Passel, and to really have an input into where we end up.
Question 2 is a vitally important question. Since September last year, I have met with and pitched literally thousands of people from all walks of life, including logistics professionals, retail and e-commerce professionals, investors, business people, friends, family, the startup communities in Melbourne and Silicon Valley and interested bystanders.
Not one person I have met has told me this won’t work.
The timing is right. The market is ready and we can build the tech and the network to do this well, and we’ve got the team that will deliver.
Julian and I are all in. Passel is going to work!
Again, thanks for all your feedback, help and support. If you want to follow Passel on social media, the links are below.