Wednesday, October 9, 2013

How Some Mormon Newbs Wrote Some Boring Code, Got 6 Million Downloads in Four Days and Ended Up With the Best Series 'A' Story Ever

From Pando Daily:

company connections
Garrett Gee and his co-founders are newbs to the whole Silicon Valley thing.  They’re first time founders, young Mormons from Utah who studied design and computer science at Brigham Young University. But you wouldn’t guess they were inexperienced from the way they raised their Series A. The trio had investment interest from all sides, and played firms off each other to get the terms they wanted.

They built the world’s most boring product: Scan, a QR code generator and accompanying app. Companies can download their own QR code and give them to customers for coupon deals or quick social media follows.

Scan wasn’t the first QR generator to market, but it’s an easy to use product that gained traction. There’s an accompanying mobile app for customers with linked social accounts, which makes the QR scan –> Twitter follow conversion more likely to happen.

What the company does is pretty useful and boring. What’s more interesting is the story of what they don’t do: raise a Series A from Silicon Valley. The Scan co-founders decided to bypass Bay Area institutional investors, even though they had the option, and take money from an international firm instead. Today they announced their $7 million Series A from London-based Entree Capital.

The story of how their Series A transpired is a wild and crazy ride, the sort of roller coaster that happens only once in an entrepreneur’s life. But within the narrative arc are nuggets of gold — lessons that are useful for the broader startup population.

Scan decided to raise their Series A not because they needed it, but because their app had taken off. It got six million downloads in four days when it launched on Android. When that happened investors started reaching out, so it decided to take advantage of the momentum and raise for reserves.

Garrett Gee, the face of the company, was challenged by one of his co-founders to raise $3 million in seven days. Gee accepted the challenge, and took 48 meetings with investors in the span of two weeks. After making the rounds, he struck a deal, negotiating a terms sheet for $3 million from a respected VC firm. Gee wouldn’t say which one, because he eventually ended up dumping them. Scan had a month to consider the terms and sign it before the deal expired.

But then Gee received an email through AngelList from a VC firm in London — Entree Capital. Entree saw Scan’s profile on AngelList, and it was looking for QR scan investments (side note: who the hell specializes in QR scan investments?). Gee hopped on a call with them. After a brief back and forth — we’re talking within the hour — the investor offered him $5 million, contingent on him flying out to London for an in-person meeting....MORE