My name is Scott Goldman. 

I'm the Co-founder and former CEO of TextPower Incorporated. TextPower provides notifications via text messaging for utilities, municipalities, and courts.

We’re a platform that other companies use to integrate with in order to send messages that are mainly triggered via API calls when an event occurs.

When we first started the company 15 years ago, we bootstrapped it. 

My partner and I both put in a couple of hundred thousand dollars each and we had intended not to take any outside funding. 

But a couple of family and friends investors backed out at the last minute. When they did, we needed to get funding in order to attack the market that we later decided to pursue.

We weren't sure of the market that we wanted to capture initially because we had just bought a software library for sending text messages on an integrated basis. 

We did raise $500k in the fourth year from angel investors. We used that $500k to establish ourselves in a couple of the defined markets.

As we began to establish ourselves, we went back to the same angels and raised another $500k, but that was a couple of years later.  

The total that we raised over the lifetime of the company was about $1M. 

We wanted to find the niche that we were going to go after first. 

We wanted to make sure that we were already established and recognized so that when we went to the investors, we could get the money we needed for scaling.

Investors really prefer businesses that are scaling. They really like scalable, recurring revenue subscription businesses.

We targeted people who had already invested in other companies that provided similar software-based services (SaaS) and understood the model.

There are plenty of sources, like PitchBook and TechCrunch, where you can find lists or names of people who have invested in companies like yours.

We did a lot of cold calling. We had to get through the gatekeeper who was usually an admin executive assistant. 

We made a pitch to that person in a different manner than we did to the investor. 

I’d say that I knew the investor gets a lot of calls like this, but I believed we had something they’d be interested in. 

I’d say that it was in a market that he was familiar with, that we we're already generating recurring revenue, and that I’d need 10 minutes of his time, and that at the 10-minute mark on the call if they weren’t interested they could just cut me off.

If you give people the opportunity to limit you to a certain amount of time, you will probably have greater success in getting a call back.

We reached out to 20 investors and had initial conversations with about a dozen. We only needed a few angels to invest a hundred to a couple of hundred thousand.

We targeted 15 or 20 but actually only spoke to about a dozen. Out of that dozen, we got 4 investors. That was a pretty high hit rate for us, which I attribute to being well-prepared.

Because my co-founder and I had already been through a couple of startups, we had a better idea of what it would take to deliver a message that would resonate with those investors.

One of them was that we were both pretty established businessmen at that point. 

My partner and I both had been well established in the wireless technology world through the years. We made it very clear that we've been down this road before.

We understand how startups fail and we also understand how they succeed. 

We said that we were building a business that was going to be nearly 100% recurring revenue. We said that we were creating a business that would not be a high attrition business.

When you sign up municipalities or utilities they are typically in it for the long haul. 

Particularly if you provide them with a set of APIs that they start developing into as they don't want to have to go through it repeatedly.

We weren’t building a business where we'd need to go out looking for new accounts every day. 

We wanted to build a business where we keep 80 to 90% of our current accounts every year and build on top of that.

We could have done this better. One of the things that we could have implemented was live demonstrations for our prospective investors.

We could have signed them up to a dummy account and said, ‘hey, here's what happens when there's an outage at your home.’ 

In retrospect, that would have been more impactful and it probably would have helped us accelerate the process significantly.

The biggest challenge was that the economy was very slow at the time we raised. There was no guarantee that we were going to make it in any business that we were in. 

So the challenge we faced was convincing investors that we would survive. It took a little bit more time than it would have in another economic environment. 

The other challenge that we faced was because text messaging was not as ubiquitous as it is today, people didn't instantly understand the pitch.

That was a challenge that we could have overcome if we had created a better demo for our investors to participate in rather than seeing something on a screen during a pitch.

A real live demo that gets the investors interactively involved would have gone a long way.

If you are looking to get into a market, find a very narrow niche. You can always expand later, but you can't boil the ocean. Even if you have a big vision, at first keep your focus narrow.

Anybody who doesn't have a co-founder is probably making a mistake. Don't try to keep it all in your own house. 

You're a lot better off sharing the load and coming up with a natural division of labor than you are trying to do everything yourself.

If I was a founder again today, I would spend even more time on the pitch deck than we did. We didn’t have investors tell us that we needed to boil the pitch down and distill what’s important to them. 

They’re not going to spend an hour on the phone during your first call. Brevity is what's important. You have to make your impact through as few words as possible.

Also, you don't just want people's money. You want their support, their advice, their contacts, and their connections. 

Those things only come when they have a comfort level with you in addition to your business.

Also don't underestimate the stress. Everybody thinks that starting a company is a matter of having an idea, working really hard, and getting some money from investors. 

All of those things are true, However, the stress of not having money coming in — being the only one who is going to generate a paycheck for yourself and your family — is a lot.

When you are under a tremendous amount of stress, you need to allocate time for yourself. Getting away from the desk and getting away from the phone is extremely important. 

Take a walk, get out with your dog, take a hike, a bike ride, whatever it is that you need to do to help blow off steam and alleviate some of that stress. 

If you are not in good health or good mental health, you're doing a disservice to your investors and to yourself. It's not going to change your business, but it will change your life.

It's best to go to a group to find a list of investors who participate in the group. The one that I can mention here is the Tech Coast Angels. 

Look for those groups because this is where people who are interested in hearing ideas aggregate.

And if you know people who have real wealth, you may not be comfortable asking them for money, and that's okay, but you could ask them if they know anyone that might be interested in investing in your business.

And if they're interested in investing themselves, they'll tell you. It takes the responsibility off of you to pitch them.

One podcast I listen to regularly is Acquired. They do deep dives into companies that have become very successful and go back to the very beginnings of a company. That's a great resource.

I also listen to Scott Galloway and Ed Elson’s podcast First-Time Founders. That's a good one as well because they interview founders directly.

From a reading standpoint, I've been a Wall Street Journal reader since I was a kid. If you read into the stories you begin to discover where those needs and niches are. 

It gives you more insight into the business environment in general, and I would encourage people to read that newspaper.

Money isn't everything. A lot of people will go to investors just because they need money. 

Don't look for investors just for money. There is money everywhere. You can find money in many places. 

People bootstrap companies up to a couple hundred thousand dollars with credit cards or second mortgages. You can do that if you truly want to.

Look for people who can help you and advise you and the company.

It's a really important factor when you're getting started in a company and most people underestimate the impact of having investors that they can talk to and get connections from.