This year is set to be a big one for Milk Chocolate. Following a universally turbulent 2020, we’re gearing up for some pretty major developments – not least our series A round, which is scheduled for December 2021.
We’ve raised around $750,000 in capital so far; $450,000 in our 2019 seed round and $300,000 in a more recent bridging round. Throughout our experience of raising money for Milk Chocolate, we’ve discovered a few things about funding and the incredible value it offers. As we excitedly move towards our series A, here are some of the lessons we’ve learned.
Funding is crucial for business growth
Like most other start-ups, our goal is to be first to market and to gain majority market share as early as possible. We could move towards our goal organically, but we’d risk getting there too late.
That’s where funding comes in. While it’s not a path every start-up takes, going through funding rounds is, to us, a crucial catalyst for accelerated business growth. With that extra money, we’re able to scale at pace without worrying about cash flow and hire new staff that we’d otherwise have to wait for. Especially in our product team – which is currently not an income-producing vertical – this is particularly important.
After successful seed and bridging rounds, we were able to invest in new business, advertising, a prototype client portal, a retail website and multiple staff hires – ventures that, without funding, would have been near impossible at such a rapid rate. Should our series A round be fruitful, we’ll be doing more of the same (albeit to a much larger extent) and growing our product even more substantially.
It pays to prepare early
The key to success when raising funds is to lay the groundwork well ahead of time. (In fact, we’re already thinking about our series B round in 2024.) While early planning entails things like setting funding targets, dictating what the funds will be used for, putting together a comprehensive pitch deck, collating a list of potential investors and booking meetings, it also goes far beyond concrete tasks.
For us, it means planting the seed years in advance by developing relationships with potential investors. Our dialogue with each prospect is constant; we treat every new meeting as a soft pitch and touch base to provide business updates every two to three months to generate a bit of excitement around what we’re doing. We start serious investment conversations 12 months out from each funding round, and that’s when we find that our prior rapport is essential. After all, a warm lead always trumps a cold one.
It’s worth getting staff on-board
Richie and Michael are responsible for overseeing and carrying out the funding process, but its implementation would be near impossible without the support and input of our team. It’s one in, all in at Milk Chocolate, and we try our best to maintain complete transparency when it comes to the financial ins and outs of the business; our staff are fully aware of our funding timelines, our targets and the valuations we need to hit.
Every Friday, we share our business progress at our weekly all-staff meeting, providing insight into our wins, challenges and learnings. Fundraising is one of the main points on the agenda, and discussing it so openly with the rest of the team fosters a sense of trust, establishes clear goals and gives our staff a feeling of ownership – values that we believe make for a healthier and more motivated workplace.
The benefits we’ve gained go far beyond monetary value
Through each round of funding, we’ve met a bevy of interesting people (many of them who’ve found success in entirely different fields), established new relationships and nurtured existing ones, and gained a wealth of insight.
Each new investor offers expertise and experience, and often invaluable business advice and mentorship. We’ve also managed to bring on external resources who have vital skill sets that help to fill some of our knowledge gaps. While funding is always the number-one priority, there’s so much more to be gained outside money.
It’s bloody hard, but ultimately worth it
Going through funding rounds is an exhilarating rollercoaster ride: with every up comes an inevitable down. The process is nothing if not demanding, and there are plenty of moments that really test our resilience.
Firstly, managing the process is effectively a full-time gig. When you’re running a company, you’re already working 100+ hours per week, and adding the pressure of fundraising only magnifies the strain.
We’ve also received our fair share of rejections, which can be enormously disheartening when we’ve put everything we’ve got into the business, the relationship and the pitch. However, there’s a lot to be gained from each ‘no’, and we try to treat every unsuccessful meeting as a learning experience to figure out how we can do better next time.
Ultimately, though, despite the obstacles that come with raising capital, the challenge is undoubtedly worth it. When we look at the outcome and the lessons along the way, it’s clear that funding is an absolutely invaluable part of Milk Chocolate’s success.
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