Five Lessons Learned from the Ample Hills $8 Million Raise

Board meetings at @amplehills are dangerous.

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When you're Ample Hills Creamery, the #1 rated ice cream shop in the country you can pretty much throw everything you've been told about fundraising out the window.  Nothing seems to apply--you're not a tech company, you bootstrapped your way to millions in revenues before taking on capital, and you sell mostly through brick and mortar.  Yet, the lessons learned from their $8mm round of funding announced this week are still widely applicable to every startup--particularly food startups and those in four walls retail that struggle through the traditional venture process.

Here's what I think everyone involved learned in this process.

1) Find backers who love you for what you are, even if you're a square peg.

When Ample Hills first raised $4 million in 2015, people asked if it was a seed round.  Technically, that's what we called it, but it didn't seem entirely appropriate given that it had already been up and running for years and had millions in revenue.  When we raised that first round, we needed to figure out who was even open to the idea of backing an ice cream shop with national and global ambition.  We hosted meeting after meeting, stuffing as many investors in the room as we good in groups, invited via waves of mass e-mails to anyone I thought might be interested.  What we found is that while most of the people turned down the invite, most of the people who showed up invested.  Ample Hills wasn't a deal for everyone, but for those that were open to it, they loved the company.

Did that seed make this round our Series A?  Would we pitch Series A players?  I pushed that we should just say what it is--an $8 million raise to grow the company.  Who cares what we called it?  In fact, I thought we should have named our rounds after ice cream flavors but that was quickly shot down by the lawyers.  

The truth is, it doesn't matter--that you can very easily get caught up in positioning, but at the end of the day, an investor who really wants to invest is going to invest.  It's too easy to think that if you tilt the pitch just a little one way or the other, that's going to make the difference, but that's Monday morning quarterbacking.  Rounds aren't close--they either happen or they don't, and an investor on the fence is a pass.  Investors who want to be in will find a way to come in and will structure an economic deal that makes sense, no matter what they call it.

2) When you stray from traditional tech investors, leave yourself twice as much time, because they're twice as unpredictable.  

Tech VC is a pretty mature marketplace--the players are known, the process is established, and so while relationship building might take time, usually you can estimate how long a deal will take with some accuracy (besides, of course, that it takes longer than the founder wants). AH kicked off this raise based on some inbound conversations with high net worth individuals back in the first quarter of this year--over nine months ago.  These types of folks, who may or may not have family offices that they work with, range in difficulty to work with.  Sometimes, the person whose money it is could just say yes, and points to a person to make it happen.  Other times, they hand it off to a team that could take months to do their work.  You just don't know.

In AH's case, ultimately, the person we started talking with didn't actually wind up participating, but still remains a valuable contact and potentially a key partner for the future.  However, someone they introduced the company to wound up a writing seven figure check on a quick turnaround.  Point being, if you're working with family offices and high net worth folks, leave yourself plenty of time.  Investing in you isn't always their immediate priority, and they're used to dealing with people they know a lot better than the typical VC knows a founder when they pull the trigger.

3) Find a flexible lead.

One of the best things a lead can be, especially when you've got a company that doesn't exactly look like every other company, is flexible.  Mike Murphy over at Rosecliff was actually one of the last people Brian and Jackie at Ample Hills spoke to in this process--but he said exactly what any founder would want to hear.  He wanted to be an investor and was willing to fit into the round any way he could.  He didn't come in asking for some crazy ownership or with lots of caveats about minimum check size, etc.  As it turned out, we were oversubscribed with a bunch of individuals and smaller funds that wanted to participate but wouldn't lead, and the round the founders liked the most was one where everyone got to participate.  What was needed was for someone to set the price and to be flexible enough to allow these strategic and helpful new investors to participate.  That was in stark contrast to other folks the company spoke to who wanted to eat up the whole round--so, in the end, he won out by being the most reasonable to work with in addition to all of his great experience investing in the space. 

There's really no better way to win around than to make the founders feel the most comfortable working out a transaction with you.

4) Don't be afraid to wait for the deal you're happy with.  

Ice cream has gotten to be a pretty hot space, ironically, for high profile investors to get into lately.  Sometimes, you run into big name investors who have great potential value as a strategic investor, but they want to get paid extra for their brand's value in the form of equity or lower valuations. 

Ample Hills has been offered these deals and turned them down.

Other times, you might meet a great investor you like a lot, but who isn't as familiar with your space.  They may want a lower valuation as a kind of risk premium for investing in you.  That happened with Ample--they found an investor who spent most of their time in adjacent spaces but didn't quite have the same risk tolerance to participate in a vision that included a big bet on a particular strategy.  It was tough, but the company felt like it could do better economically--which was pretty stressful given how long the process was taking. 

It turns out the right investor and the right deal was worth waiting for as we got a fair price and a great lead that believes in the company.  I see so many retail and CPG deals that get hamstrung by bad investment deals they felt forced to take that only limit them later on.  Of course, a key to this strategy was knowing that there was a critical mass of insiders who would have bought the company another 6-9 months if needed, so we knew the company wasn't going anywhere.

5) Give all of your existing investors homework.

We wound up with about two dozen investors in the first round of Ample Hills, and we had a bunch of those people pitch in to help with the second.  Closing this round was a real team effort. 

Taylor Greene from LHV was the first to bring up Mike at Rosecliff as a potential investor.  Adam Struck brought on significant additional capital from his network.  I introduced the company to Bullish as well as the Allana Group who, amazingly enough, cold e-mailed me out of the blue from a Bloomberg article.  (Sometimes, foreign strangers offering business deals aren't spam after all!). 

Also, Brooklyn Bridge Ventures LPs contributed a big chunk of the round as co-investors, adding to their participation in nearly 40% of the firm's deals.  One investor, Morgan Johnson of Nucleus, wound up spending so much time helping to coordinate negotiations with some of the potential new investors as well as bringing new capital to the table, that he built up a lot of trust from Brian and Jackie.  This led to him actually joining the company as President.  

While some companies might feel that having so many investors on the cap table creates a lot of people to manage, I can easily say that without almost every last person on this capital, we wouldn't have been able to close this deal.  I can't say enough about putting your investors to work with specific homework.

We're excited about the future of Ample Hills, our new factory opening soon and a lot of great deals in the works for expansion and creative collaborations like their fan favorite Star Wars themed ice cream.  

Don't Be Dismissive


Finding Community in NYC Tech Again

There's a thread going on Twitter about doing a BarCamp in NYC again.  I started with a tweet from Jeff Namnum about how he joined the tech community...

It touched off a whole discussion about putting on a BarCamp here again--a collaborative, open "unconference" where people could come together to share and learn about a wide variety of topics.  We haven't done one in NYC in a while, but moreover it feels like the sense of a common community we used to have in the early days of the tech community has been replaced by scale and a lot of heads down work.  Where there used to be the same crews of people attending the NY Tech Meetup every month, there is now 5 tech oriented Meetups a night on specific things like cryptocurrencies, ecommerce conversion best practices, and Clojure.  Sure, it's great that NYC has scaled into the second largest tech community in the world, with layers upon layers of knowledge and experience, successful growing companies, etc., it feels a bit like we've lost a little something about how we used to convene in smaller, more consistent and intimate groups. 

I've been thinking about why this has happened and I can point to a few things:

1) My peer group of twentyish somethings grew up a bit, became super successful, coupled up, procreated, moved out to Brooklyn, etc., and just doesn't have the social flexibility they once did.  Or, they just got a big fatigued with running around doing events they weren't getting paid for all the time.

2) The larger companies outgrew the community.  Holiday season used to mean getting invites to holiday parties at companies like Squarespace and Foursquare.  Back then, they were in offices that were yet unfilled, and opening up to the community still meant a manageable number of people.  Today, their own companies are communities unto themselves--and marketing and recruiting has gotten a bit more mature than just e-mailing a lot of people to consume egg nog.  

3) In some cases, it was a reflection of what was big at the time.  There were no better spokespeople for their own products than Dennis at Foursquare, David at Tumblr, Jacob at Vimeo, Kortina at Venmo, etc, etc...  Participating in the community was almost part of the job.  In today's NYC, you wouldn't market Warby, Datadog, MongoDB or Casper with photos from last night.  No one is coming up to you at a bar anymore trying to get you to try their social app (RIP Hot Potato.)

4) Space doesn't seem to be as easy to come by these days.  Remember when Sun used to host events at 101 Park?  How many events did Jack open CRESA's doors for us?  These days, there's much more competition for space to hold events and a lot of the spaces have professionalized, charging because they're now in the business of space.  

Whatever the case, it's hard to figure out where to tell someone to go in NYC's tech and startup community if they want to meet up with awesome people doing cool stuff.  You can't just swing by Tom and Jerry's anymore

That's one of my 2018 goals--is to help make NYC tech feel smaller again, and more connected.  I'm starting with building up some cohorts of new seed-funded companies.  Raising a first round of capital is as good a proxy for "Someone vouched for you and you're a legit founder doing cool stuff with actual resources to give it a shot."  I'm trying to bring together every single founder in NYC who raised their first $500k or more of capital in 2017.  (If that's you, check out the group  signup here and we'll invite you to the first meeting tomorrow (Tuesday) night on the 12th).

We'll do a 2018 cohort and so on... and more water cooler style events that bring NYC's community together.  Check out our dinners and Stackup talks as well.  NYC can be a huge platform for anyone to make an impact on the world, but it would be great if it could still feel like a neighborhood you grew up in as well.


Rethinking Our Heroes

As I sat in the movie theater watching Justice League, I thought a lot about the idea of a hero in the context of 2017.  

Generally, we've thought of heroes as possessing some kind of special power--or larger than life.  We've confused the powerful and influential for people we should look up to.  Yet, as we've seen in the retelling of a lot of the comic book stories on screen, our heroes aren't always purely good, nor are they as good at being people as they are at being powerful.  

This year has seen a toppling of those heroes the likes of which we've never seen before--Hollywood Actors and Directors, Former Presidents, US Senators, Would Be Senators, Midas List VCs, and yes, Confederate Generals.  We're being forced to reckon with our ties to everyone from slave-owning forefathers to Bill Clinton.  

We look up to heroes because we see them exhibiting power over others--yet it's this power they often seen to struggle to control and use appropriately.

As 2017 winds down to a close in the next two months, perhaps we can all think about what kind of heroes we'd like to have in 2018.  As many heroes fell this year, many others found the heroes in themselves--taking to the streets in protest for the first time, sharing their stories of mistreatment, and taking the time to listen and learn about the struggles of others.  

What kind of hero do you want to be?  Will you risk speaking up on behalf of others when it isn't popular?  Will you be vulnerable?  Will you admit when you were wrong, and try to make up for when you fell short with people?

Not all of us have a cape.  Not all of us are rich.  

But we can all be heroes.  

The Foolproof Way to Tell if Your Employees Have Issues

CEOs, founders and managers are more worried than ever about issues in their organization that they might not be aware of.  We've seen a ton of stories come out recently around bad workplace environments, and business leaders know that for every really bad story, there are a thousand festering smaller issues that need to be gotten out in front of before they get worse.  

That's why it's critical that they understand the one question that can fish out whether or not there are workplace issues lurking underneath the surface of their companies.

Here's the question...  are you ready?

You sure?


Ask yourself, "Does my company have more than one human working in it?"

If you answered "Yes" then your company surely has workplace conflict and issues.  There is a 100% chance that when two individual humans work together in the same place, things will come up.  It's perfectly natural, but it's also something they don't have good tools to work out on their own. 

Bringing up conflict is difficult.  First, a lot of people are embarrassed that they can't fix a situation on their own.  They might feel like they're making a big deal out of nothing, even though it's making them more and more unhappy each day.  

Second, even when a company does have outlets, like manager reviews or HR staff members, these relationships can easily be perceived as conflicted.  Maybe you're not ready to talk to HR or the problem is with your direct boss, and you don't want to make the situation worse because you can't change your boss.  

Whatever the reason, these issues most often manifest themselves in unexpected churn.  How many times is the first hint of employee unhappiness the day they give notice about leaving?

At worst, these issues come out in headlines.  In so many of the worst stories we've seen this year, there was a moment where someone could have head something off before the issue grew.  

That's why Brooklyn Bridge Ventures recently funded Bravely.  

Bravely that offers conflict and communication coaching for employees navigating issues in the workplace.  Through Bravely’s application, employees can confidentially describe the issue they’re facing and schedule a phone consultation with a ‘Pro’, an expert coach or HR professional with deep experience in helping resolve conflict, structure effective communication plans, and develop skills for constructive work relationships.

Every single company has issues.  Hopefully not all of them are as serious as the ones that make headlines, but 65% of performance problems are linked to strained personal relationships, which happens everywhere.  Effective communication among colleagues, even for the small stuff that a lot of people let go, yields a significant impact on workplace wellbeing. 

The secret sauce of Bravely is to help employees feel empowered--given them strategies and language toolsets to address acute issues right on the spot.  Bravely is that first step; that safe place for venting, getting advice and putting a game plan together when you are not yet ready or lack the confidence to approach your boss or HR business partner.

I'm excited to work with Toby and Sarah, two experienced former startup pros, as well as my co-investors Primary Ventures, Trailmix, and Correlation. 

If your workplace has more than one human working in it, there is absolutely no reason why you shouldn't talk to Bravely now.