Entrepreneurship can be more than a marathon. It’s a decathlon. Knowing when to quit or persist can be an art. Raising funding for a startup can be a formidable game. Henry Ward is an entrepreneur who knows this all too well.
In his exclusive interview on the DealMakers Podcast, he describes how he has launched more than one company, raised $147.8 million from top tier investors, and his take on the art of being an entrepreneur.
Failing Forward
Henry Ward is the CEO and founder of Carta, a highly successful startup that has raised hundreds of millions of dollars from top VCs, though he has had quite a journey on the way up.
Being an avid cyclist, Henry headed off to Paris, France to ride a bicycle and gain his Masters in Capital Market Finance. He was then recruited to corporate America where he worked for a handful of software companies for almost eight years, including Trilogy and SAP. Finally making his way to the Bay Area.
He started his own company Secondsight, a suite of tools for investment bankers and retail investors trying to figure out what to do with their 401k money.
Despite his best efforts and well over a year in the making, it flopped, even after getting a funding commitment for $500k.
That term sheet was contingent on raising another $250k to close the round. The money never came in. Henry set himself a hard deadline, by which he would quit if he didn’t secure customers and raise the rest of the funding he needed. He ended up pulling the plug.
The big problem was that after tasting entrepreneurship, he really couldn’t imagine doing anything else. Certainly not going back to work for someone else. Today, he is so glad that failure happened, or he never would have stumbled on the startup he is heading up today.
He missed the excitement of controlling your own destiny that entrepreneurship offers, and spent several months looking for new ideas. It was then that the investor who offered to back his previous venture brought him the idea that would become eShares and then Carta.
Three Foundational Keys to Startup Success
We learn a lot from failing that can really help us take things to the next level. After his first startup attempt, Ward knew what not to do in the first 18 months of this new company.
Three essential to-dos were:
- Surrounding himself with good product engineers
- Really getting a handle on product market fit
- Learning how to talk to investors
These were accomplished by hiring great product founders and engineers, talking to customers even before writing a line of code to understand what they wanted, and trying to learn what investors wanted.
If he was to ever start again, Ward says he would spend a lot more time thinking about and vetting an idea before jumping into it. Spend a lot of time talking to customers or potential customers, and also talking to investors, and really starting to define and refine the business model, the customer acquisition strategy, the business model, the defensibility, the network effect.
Still, with all the planning you may do, how you really ultimately get from point A to point Z is often an unknown at the start. Figuring it out on the go remains one of the exciting parts of being an entrepreneur.
Entrepreneur Bootcamp & The Fundraising Game
Henry describes the fundraising process as a gauntlet for entrepreneurs. A boot camp or trial by fire that you just have to go through.
Carta’s seed round was $1.8 million. The Series D was $80 million. A total of about $147.8 million has been raised to date. Those investors include Meritech, Tribe Capital, Union Square Ventures, Spark Capital, and Menlo Ventures
Today, Carta has 500 employees across seven offices in San Francisco, Palo Alto, Seattle, Salt Lake, New York, New Jersey, and Rio de Janeiro, Brazil.
Yet, Henry says there were plenty of tough days and “no’s.” Maybe 70 turndowns by angels just to get the Series A done. He pitched 30 venture funds before getting a single term sheet.
That’s just on this startup. There were maybe 200 turndowns from investors on his previous startup.
So, what changed. How do you get from all those no’s to yes?
- He had to go from fundraising in California to New York where investors got it
- He learned the secret isn’t convincing investors, it is finding the investors that love the idea
- Learn to leverage a lead investor who will syndicate the deal to others
- Learning some sales skills
Persistence certainly helps too. The art is knowing when to keep going versus pulling the plug.
You can’t just get lost in your current round either. As Reid Hoffman says, whenever you're raising money, you need to always focus on what your next round is going to be like.
Still, with all these millions, you can tell that one of the most meaningful and exciting days for Henry Ward was the day they got their first few dollars from their first customer. He says the first payment took a month. Stripe had just released their API. The team was working through Christmas just to get Stripe working so they could take their first credit card payments.
On January 10th, a company in Austin, Texas paid them $120 to issue their first five or six stock certificates. The team was all still crossing fingers, watching the Stripe output log to see if they’d actually get paid or not. Carta has only scaled from there.
Listen in to the full podcast episode to find out more, including:
- Why outsourcing to Rio was so appealing
- Why Carta had to change names from eShares
- How they chose a new brand name
- What made $100k for a domain name seem cheap
- The most common mistakes investors and founders make with cap tables
