Crowdlinker originally started off at a Startup Weekend back in June 2012, which we ended up winning but for an entirely different idea to what we are pursuing now. Social has always been in our DNA, even to this day despite our new focus, we are advocates of enriching peoples’ lives through creating simpler and more effective ways of networking with people. We incorporated the company in October 2012, so we have been around for over 2 years now, and have successfully raised $1 million in total funding to date. We were able to accomplish this without any money from venture capitalists and the founders still own and control 100% of our company. That’s right we haven’t diluted…yet. A lot of people ask us how we were able to do it given that only 10% of companies are around after 1 year and even fewer are able to raise any significant money. We’d like to share with you our story and how we got here.
But before we tell you about how we went about raising this funding, I’d like to briefly tell you about our pivots and why we did them. The concept that we originally launched post Startup Weekend was a web app called EventLink. It enabled you to see the professional credentials of event attendees at events and conferences by integrating with Linkedin (to extract things like your skills, current place of employment, etc.) and Meetup for event listings. If it would have scaled and been implemented by event organizers, then it would have been your one stop shop to see the who’s who from a professional networking standpoint at any event you want to attend. We thought it was a novel idea, but event organizers didn’t see it that way. Despite our efforts, they were concerned about opening up their attendee lists to the public, because they were concerned that it would erode an incentive to purchase a ticket once you could see those who’ve RSVPed. They clearly did not want you to network outside of the event, potentially missing out on ticket sales.
After months of trying to make it work, we briefly pivoted to the recruitment space. We tried to leverage our recommendation technology to identify worthwhile prospects for SMBs to connect with who are open to new employment opportunities. We quickly discovered how competitive the recruitment industry is and how difficult it is to penetrate it as a new entrant. After a few more months of banging our heads against the wall, we saw a wonderful opportunity in the digital media space that was ripe for change and disruption by leveraging our core tech.
That stated, we understand how important it is for startups to try to get traction quickly and raise some money so that you can support yourselves. Piece of advice, do your customer development and validation properly…don’t rush it! Figure out exactly what type of value you are going to be bringing to the clients and if they will pay for it. Don’t go and build a whole application/platform right away without first finding product market fit and honing in on what is the problem that you are solving.
We learned a great deal in our failures, we bootstrapped ourselves for a good year and half until we got our first “significant” funding and even then nobody took us seriously. The question that kept coming up was “are you going to be around in 2 years?” We quickly understood that for prominent players in the space, they are always concerned about working with a startup because your future is uncertain. This is totally understandable, so make sure you think smaller and just find that first initial customer who is willing to work with you and prove your value with them. Once you prove your worth, it will be easier to start acquiring those larger and more sophisticated clients.
VentureStart – RIC Centre: $30,000 Grant (2012 to late-2013)
VentureStart funding was our first big break. We applied online through the standard application process and presented a rough business plan to the fund administrators. We had to become MaRs clients to leverage the local partner network to get an advisor assigned to our company for support and mentorship. To apply, one of your co-founders had to have a degree in computer science, otherwise you don’t qualify. Payments get broken out into 2 tranches, which are separated by achievement milestones to monitor your track record to date. The advisor who you have is instrumental in your success as it’s up to them to determine whether you are on track and are hitting your deliverables.
Co-Founder Cash Investment: $70,000 (late 2012 to mid-2013)
Between the 3 Co-Founders of the company we sunk in about $70K in direct cash investments in the form of long-term shareholder loans to pay off contractors, monthly recurring services, etc. We all forfeited salaries and deferred payouts for as long as we could to get the company going.
Canada Media Fund Experimental Stream Development – Telefilm: $188,092 Repayable Advance (October 2013)
By the middle of 2013, we were starting to get desperate as we were in-between pivots. We applied to the CMF under the Experimental Stream for Development and were incredibly fortunate to get approved for $188K in funding which we applied towards the development of our social recommendation technology. We were 1 of the 2 companies in all of Canada that got funding for a social media-related initiative. For those that aren’t familiar, CMF typically funds companies that create content in the form of games, interactive content, and other types of content-first initiatives.
The process was long and required a very detailed set of deliverables for project concept (“the idea”) to how you are going to finance it (“the budget”). With this money we were able to create new jobs and start paying ourselves some sort of salary, which was a relief in many ways.
A3P – Canada Media Fund: $30,000 Grant (Early 2014)
We spent a lot of time initially working from the comfort of our own homes and collaborating via Google Hangouts and using Google Docs, which was great at first, but we really needed to meet face to face on many occasions. We took part in a pre-accelerator called DRIVEN that gave us office space at CSI locations throughout the City of Toronto. It was great, but when we finished the program, we needed to find a new temporary office to work at. We saw an opportunity to get discounted office space through OfficeExec and got the first 3 months for free. However, it wasn’t a great place to work at, since we didn’t have any other startups to collaborate with. There were mostly immigration lawyers and other self-employed professionals sharing that office with us.
This was when we decided to apply to the Digital Media Zone at Ryerson University, which is rated as the #1 startup incubator in Canada and #6 in the world. Fortunately for us, we were guinea pigs in a new initiative from the CMF which provides a $30K grant if you join an eligible accelerator/incubator in Canada to jump start your business by setting you on a clear trajectory with the help of reputable advisors and mentors. In February 2014, we got accepted into the DMZ and got a $30K grant from the Canada Media Fund.
IRAP – National Research Council: $32,000 Grant (Early 2014)
When we had a specific technical challenge that we discovered in our development stages that required additional resources to complete, we got in touch with a very knowledge IRAP advisor at MaRs who helped us with our application. Having secured CMF Development funding and being part of the DMZ really helped our application as we had a clear set of requirements that needed to be completed. Please note though, that you should only approach an IRAP advisor once you discover a technical obstacle in your development process without a known solution that will require numerous iterations to overcome. Just like with VentureStart, IRAP payouts came out in increments based on our milestones that we were able to meet. We must admit, it’s nice getting cheques from the Government of Canada…
Canada Media Fund Experimental Stream Production – Telefilm: $650,000 Recoupable Investment (July 2014)
During our CMF Development project we discovered many new opportunities in the media industry that weren’t being adequately addressed. We decided to re-apply to the CMF, but this time for Production funding under the Experimental Stream. There are a total of 3 stages that you could apply for under the Experimental Stream: Development (we did this first), Production (did this second), and Marketing (we will most likely do this as well). In our application, we leveraged what we created under the Development project and applied it towards a more sophisticated and grandiose vision.
Since the scope of the production application was aligned with our development project, the CMF put our initial $188K repayable advance and added it on top of our production funding round for a combined total of $838,092. This is kind of a big deal, because there are very few companies in Canada that are able to get both Development and Production funding from the CMF for a social media project. One more thing, we applied for Production funding and got accepted while our development project was still open, this gave us a consistent runway for allocating future development resources towards the project.
Summary: $1,000,092 total funding to date.
Our next step is to take advantage of SR&ED (Scientific Research and Experimental Development) tax incentive program by Q1 2015. As you can see based on the information we shared above, we were able to secure a considerable amount of funding without any VCs, angels, or bank loans. We don’t think this would have been possible anywhere outside of Canada, and we consider ourselves very fortunate to be Canadian entrepreneurs. Hopefully, our next round of financing in the form of a Series A will result in a larger raise and inevitably more risk! It will definitely require a steep learning curve, but with any new experience, which requires a lot of time and effort on our part to figure out the processes… I’m sure our team will figure it out and share our learnings with you.
We like to share our learnings with fellow aspiring entrepreneurs, so if you have any questions or want advice on grants and funding send us an email to firstname.lastname@example.org.