How Zapier founder Wade Foster raised only $1.2 million of VC to grow a multi-billion dollar startup
How Zapier founder Wade Foster raised only $1.2 million of VC to grow a multi-billion dollar startup
Our latest free Ubiquity University video provides advice from Zapier CEO Wade Foster on when it makes sense to raise venture capital vs. bootstrap.
One of the many bad behaviors from the 2021 bubble was that too many entrepreneurs sought venture capital as a sign of validation (“I want that billion-dollar unicorn valuation”) vs. a strategic accelerant to the business. At Ubiquity Ventures, we prefer the latter and seek to find unique opportunities and unique entrepreneurs where small amounts of venture capital ($1-2 million) and lots of our help can dramatically accelerate an entrepreneur’s efforts.
In today’s just-released Ubiquity University video, Zapier CEO/Co-Founder Wade Foster shares his thoughts about the right and wrong reasons to raise venture capital. Wade has a unique perspective having only raised $1.2 million of primary venture capital to grow Zapier into a multi-billion dollar business!
In this 15-minute Ubiquity University video (watch now), Wade takes us through the following:
How to dispel common myths about raising VC
Understanding the religious war: “VC is evil, you must bootstrap” vs. “the only way to build a great business is with VC”
2 areas for founders to reflect on honestly when considering their financing path: (1) personal goals and (2) the opportunity at hand
The false founder dichotomy of “change the world” vs. “start a lifestyle business”
How Wade ignored this noise (even after going through YCombinator)
How to tailor your startup’s approach (team skills, marketing/customer acquisition cost, and more) to ensure you raise only what you need
How Zapier was able to only raise $1.2 million in venture capital
Wade talks through his story of launching Zapier with co-founders Mike and Bryan in 2011 in Columbia, Missouri. They kept their day jobs and made other decisions to optimize spending.
They raised a $1.2 million seed round from Bessemer (where Mackey Craven, Trevor Oelschig, David Cowan and I led this round) but used this money very carefully, e.g., a year later they had only brought on 3 teammates to the initial team of 3 co-founders. See their October 2012 TechCrunch funding announcement.
Amazingly, Zapier has never had more than a $20K monthly burn.
Wade describes this as “losing $20K a month” whereas most startups would refer to this as “spending” or “burning” $20K a month.
Zapier maintained a 10% monthly revenue growth rate for 48+ months straight!
When does VC actually make sense: 5 questions to ask
Will hiring folks earlier help the startup’s growth disproportionately? Is there a race with competitors?
Is there a need for upfront capital to build even an early version of the product?
Is the core business going well but you have a speculative new product you want to explore/build?
Is there a need to cash out early investors or provide founders with some liquidity via a secondary offering?
Is there something special about a VC firm (like Ubiquity Ventures) that you gain access to if you take their capital?
Ubiquity University: free, short videos for early-stage startups
We built Ubiquity University to unlock growth for early-stage startup leaders by sharing the latest knowledge and advice for pre-seed, seed, and Series A stage entrepreneurs. We have dozens of free, short (5-15 minute) practical videos that dive into key concepts, mindset shifts, and tactical advice to help startup leaders grow and develop. Our speakers include the sharpest technical and business experts from the Ubiquity Extended Team and beyond. If you know individuals who would benefit from Ubiquity University, please pass this along.
Ubiquity Ventures — led by Sunil Nagaraj — is a seed-stage venture capital firm focused on startups solving real-world physical problems with "software beyond the screen", often using smart hardware or machine learning.
If your startup fits this description, fill out the 60-second Ubiquity pitch form and you’ll hear back shortly.