My name is Tom Field. I'm the founder of Bearhug Pallet Wraps.

We share a warehouse space with a craft beer transport company.

I worked as a truck driver for that transport company for 5 years as my first job out of uni. 

I would churn through 350 grams of plastic every single day, which is necessary to keep goods secure on the pallets I would deliver. It's got pretty poor recyclability.

I found while I was working that there’s an existing product — reusable pallet wraps.

They’re big PVC sheets that can wrap around the pallet once — as opposed to 15 times with velcro on at the front. They last 1k uses as opposed to one.

The main limitation with them is that in most supply chains, pallets must move from party A to party B to party C, rather than just having pallets staying within one person's warehouse. 

If you buy one of these, it's restricted to just 7% of global pallet movement where it's applicable.

There are pooling systems where one company owns and leases these out to allow them to move through other parties. 

We've launched the world's first pooling model for reusable pallet wraps.

I started out on this about 3 years ago. We didn't actually start selling products until January of last year. 

Before then I was speaking to a few potential customers and asking for them to put in some funding to make it a strategic partnership — that never really went anywhere. 

We won a pitch competition, which got us $10k. I got a loan from an uncle for $5K.

Apart from small amounts from the transport company I worked for, I put in the rest of my own funds. 

The transport company provided a lot of access to people to talk to and prototyping improvements.

This year we did a competition with the university that my co-founder and I went to — to compete for a $100k SAFE note. 

We got people's choice, but didn't win.

We then joined an accelerator program called Boomerang Labs that had a demo day.

We were looking to raise $250k initially. I'd been talking with a friend's dad who works in construction for a bit, and he does a fair bit of investing himself. 

It lined up quite well that just before the pitch night, he put in $112k. 

That was the main thing that made the difference on the pitch night. We got 5 or 6 investors from that since we already had a good chunk of the round filled up.

Within 2weeks, 1 had put down $100k. Within another 3 weeks, another had put down $35k. 

From there we looked to close it early, but a couple more investors came on.

In total we ended up with a $325k raise.

The first $10k from the pitch competition went to developing a backend portal for operating the subscription system.

One of the biggest reservations that investors had about us was that we didn’t have any IP.

We didn't invent these wraps and there were already big players operating a similar system to what we were looking to do. 

We just earmarked all the funding to go to R&D for developing automated devices for applying the wraps.

Mainly because any big company we've spoken to won't adopt it for having to apply it manually — even if it is quicker than applying plastic.

They want to eliminate the labor component.

One person who didn't end up investing had an open calendar where you can book a slot in — which I was surprised about.

It was quite a loose and open conversation about what we're doing, without too much probing — that seemed like a good indication. 

The first call was to understand the concept and what I wanted to get across about the concept. It was also to understand a bit about me, rather than getting into all the nitty gritty.

One investor who came on board for $100K was quite open about knowing that it was our first proper raise; he told us to do due diligence on him and how to do that.

He gave us contact information of a bunch of people he’d invested in previously.

I was surprised that by reaching out to the people that he'd already invested in, I hopped on calls with them and they all told me that he was their favorite investor.

That was also a pretty good sign. Since closing only 3 months ago we've had a few meetings and he's put in what he can in terms of personal connections.

There’s an Australian resource called Airtree. 

Airtree has hundreds of investors on it — split up into angels, VCs, etc.

It also has a filter function for different industries they would normally invest in or have experience in. 

We just filtered that resource for logistics, consumer products & retail, B2B, and churned through that list.

We didn't reach out to many people at all; we probably reached out to 50.

I had meetings with 4, but no one that we did cold outreach to invested.

On some level it’s quite a simple thing we're working on, on other levels obviously not.

It’s something that I can express in a pretty simple narrative.

It's something that people haven't often heard of but can see that there’s a gap that needs to be filled.

In terms of people's reservations, we were just well-prepared with the answers for them.

Most of the investors were in agreement that by getting the moat in place as we develop the system and doing a proof of concept around that system, to then go bigger later on.

It was the same as any sales process. 

Most of it was done over email, not too many phone calls.

One of the investors was a VC firm that was operating an angel syndicate within that VC firm. 

They were definitely the slowest to close, but they were quite transparent regarding timelines to get through the process efficiently.

We kept the same pipeline as we would with a sales process and to make sure we're nudging someone a week after they weren’t responsive.

My co-founder is working full-time elsewhere. He really just does the mornings and weekends and he's often focused on the enterprise outreach side of things — I'm managing all other tasks.

You don't want to be too distracted from customers by investors. 

Next time I'd definitely be more focused and set aside an hour or two each day for outreach in early stages and try to stay a bit more on top of putting pressure on people.

Trying to juggle day-to-day operations alongside the raise meant it dragged out longer.

In terms of being transparent with mistakes I made, when that first investor came on, we agreed on the amount over the phone.

He normally invests in gold or horses. We agreed over the phone on a certain stake in the company.

It was after 4% for x amount of money. Doing the calculations over the phone, I accidentally put it in post-money terms as opposed to pre-money.

Once that was in, we had to adhere to it. We were already talking to other investors on pre-money terms. 

That ended up splitting the raise into getting that original $112k on post-money terms and then raising the rest on pre-money terms.

That kind of turned out to be a good thing because we got that $112k in the bank and could start developing the automated systems while we were still talking with other investors.

That took a lot of pressure off and helped us get a head start. That was obviously a mistake in hindsight, but luckily it worked out in our favor.

Do whatever you can to get the first investor on board, even if it's an unsophisticated investor. No one's really going to inquire too much into that. 

If you can get family, friends, or anyone else to put down any amount of money, then that's going to be a big weight off the shoulders.

Who’s an investor you’d recommend other founders work with?

Danny Bhandari was the one who put in the $100k.

He co-founded Tibra Capital — he's obviously done the rounds a few times before.

He’s very clear on offering whatever help you want and whatever level of involvement you want him to have — he doesn’t get too involved unless you want him too.

Driving for work for 5 years, I’ve churned through every corner of YouTube and podcasts. There's a few great audio books out there. I haven't been able to find too many good podcasts. 

In terms of audio books Alex Hormozi's two books are pretty bloody good.

Never Split The Difference is a good sales negotiation book. 

I was always a bit apprehensive to read The Diary of a CEO, but that seemed like one of the best concise summaries of the different bits of ground you've got to cover. 

And obviously The Lean Startup. 

The Cold Start Problem is really the bible on anything related to network effects. That's probably been the most important one for us.

This is probably based on too little experience to say, but looking for strategic investors, unless you have a really good personal connection may be too much of a time effort in the early days.

If you're going into a pitch with a potential customer and asking them to pay for your product and give you money for a raise, it becomes a bit convoluted. You might end up losing both sides of it. 

Despite that, having a strategic investor in the early stages would be really crucial. 

If you can get a strategic investor into your round, that’s ideal.