When you're starting a business, cashflow needs to be at the forefront of what you do. While you might have the best idea in the world, finding a way to make it profitable or to attract investors can be more difficult than expected. But the startup journey is one full of twists and turns; it might not be straightforward, but if you remain agile and unafraid of making change you'll give yourself the best chance for success along the way. Suzanne Noble is the founder of Frugl, an events discovery app for those on a budget. Since starting up four years ago the platform has been on a real journey, learning many lessons along the way. Here Suzanne shares her funding story with us.
The word ‘funding’ is bandied about in start-up circles on a regular basis. Only last week, I was sitting waiting for a colleague at a busy co-working space in Moorgate, eavesdropping on a conversation between, from what I could tell, two founders of early stage businesses. One was telling the other about how they were ‘bootstrapping’ their business until, within six months or so, they’d be reaching out to investors. He made it sound easy, like moving from one flat to another, slightly bigger one. All he’d need to do was make a little bit more money to afford a higher rent, buy a few more items of furniture and he’d be all settled in his new home.
If only life were that simple.
Four years ago, I was under the same naïve assumption that if I built a product that everyone liked, without any revenue or even idea of how to generate revenue, I would be able to attract the big money guys (mainly) to invest in my business. I sold my house, downsized into a very nice (but smaller) flat, released some equity and built an app for Londoners on a budget that received loads of praise, heaps of awards and tens of thousands of downloads - but had absolutely no chance of being funded.
Meanwhile, I was haemorrhaging money and while being called ‘YPlan on a budget’ was kind of flattering (who doesn’t want to be compared to a startup that has had over $30m in funding?), it wasn’t helping when it came to attracting interest from investors who, like myself, couldn’t figure out the revenue stream.
I was so bought into the idea that with investment would come some kind of product market fit; I wasn’t able to look clearly at what I had which was a very lovely and useful app, but certainly not one that had the ability to scale to any degree that would make it investable.
Nearly four years since that first app was created, and Frugl has pivoted a number of times, during which time my co-founder Tikiri and myself were lucky enough to get the maximum start-up loan from Virgin. This enabled us to create a self-service platform for low cost and free events in London, along with a couple of apps. Once that money was gone we met a few Angels that believed in us, managing to raise nearly £75k. I’m sure the fact that they were able to take advantage of our SEIS status providing them with 50% of their investment back in tax relief also helped to secure investment.
That amount fell far short of our needs and evaporated within a year in development costs and salaries. Meanwhile, Frugl had become a kind of lo-fi version of Eventbrite. It had never been my intention to run a ticketing site. Frugl for me was always about discovering things to do and buy that were great value. Convincing promoters to give us tickets was never part of the plan, and that’s when my co-founder and I decided to use our remaining funds to get back to our original proposition, albeit one with a clear revenue stream and the potential to scale.
We launched a web app in the summer of 2017 curating the best deals from Groupon, Wowcher, Living Social and all the other deal sites while giving users the opportunity to add their own on our platform. This new platform attracted the attention of Cisco, who are currently piloting a super fast Wi-Fi network across a stretch of railway track and were looking for partners to add value to a passenger’s journey. Now we are working with them on serving up destination-based deals through a portal that enables us to reach millions of potential customers.
Four years from when we started I now understand product market fit because we’ve found it. When I look back, I wonder if we’d be where we are today had we raised a substantial amount of money. I very much doubt it. Through being lean and frugal (!), my co-founder and myself have held onto the majority of the equity in the business and are in a much stronger position as a result. We’ve had the freedom to make mistakes and we’ve grown and learned from them.
Raising investment should never be the goal when starting a business. I know it’s a cliché but invest in your business and investment will come to you. Funding is time consuming, challenging and scarce, especially if you’re an older entrepreneur. The best advice I’ve received to date came from an investor who saw me pitch Frugl four years ago. “Stay lean,” he said. “Persevere and just keep on going. Spend as little as possible. The other competition will eventually fall away and you’ll be the one that’s left.” Funnily enough, it looks like he could be right.
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