Oodles.com founder Steve Sherlock has set himself the goal of raising a multimillion dollar Series A funding round by early 2010. He is documenting his trials and tribulations and seeking feedback from readers on AnthillOnline.com. This is the seventh post in his series.
Week 7: Once bitten, twice shy
First the good news: We have a couple of companies kicking our tyres.
Now the bad news: I can’t tell you much about it.
I realise the aim of this column is to be as open and honest as possible about my experiences raising capital, but at this point I’m eager not to do anything that might jeopardise our chances of success.
If you think I’m being a little too prudent then let me tell you a painful story about how I learnt not to count chickens, the hard way.
Four years ago, when my brother and I launched the very first beta version of Oodles.com, we actually received an offer from Wotif.com to acquire the business.
Not surprisingly, we popped the champagne. But we didn’t stop there. Even though nothing was signed at this stage, we actually put our stuff in storage and moved to Brisbane to continue negotiations. To top things off, I even sold shares in a competing business so as to avoid any conflict of interest.
Of course, the deal fell through. Wotif.com was immersed in preparation for its $400 million IPO and felt the acquisition would become too much of a distraction. We were disappointed but we also understood because at that stage of our evolution we were not in a position to enhance the company’s float.
The lesson is that even if one gets a term sheet (investment offer), remember it’s not a done deal until the money is in the bank.
I’m sure you’ll understand that this time around I’ll be waiting until the ink has dried before I announce details or even crack a smile.
What I can share is some of the feedback we’ve received so far from potential investors and a little background on the source of the current interest.
Most venture capital firms we’ve met told us we were either too early for them, not seeking enough money or (as an online travel business) outside their area of expertise. Private investors have largely advised us to seek strategic investors, given we’re seeking more than the average angel would invest.
Where our pitch (‘Car rental comparison for loyalty members’) has resonated is with larger travel and media companies. Generally speaking, these people see a compelling story, which is why we’re focusing our efforts in this area.
One of the companies we approached is a global operation with a strong local presence, and it has now asked for a copy of our information memorandum. The other is a European-based firm, which I approached last year during my trip in November to the GetFundedShow in London (Week 4: Enter the Dragon). A representative from the company visited Australia and while in Melbourne he asked to review our financials.
I’ll keep you up to speed, but in the meantime we’re continuing to pursue a number of strategies.
Next post I’ll relate my experiences in dealing with an unlisted securities platform.