Raising a $2.3M Seed — After Being Rejected by YC and Leaving Behind $345,000
“I could have stayed where I was and had a life you’d be proud of, but I’d rather chase things never thought of” — Donald Glover
I stood there sobbing in our Seattle living room. I’m not necessarily a crier but that evening, tears ran uncontrollably down my face. It was April 1, 2021, and I just received the email I was dreading. The subject line simply read “YC” and the first line of the note cut right to the chase: “Hi Donald, unfortunately, we’ve decided not to fund BoxedUp this batch.”
BoxedUp was a little over two years old and after experiencing a boom in demand for our services during the COVID surge, I, unfortunately, had little to show for it. Two of my credit cards were completely maxed out and with just over $5,000 left to spend on the third one, I was starting to run out of options for BoxedUp to survive. While things were going well at my 9–5 at Amazon, the majority of my salary was going toward supporting my immediate family and my early “friends and family” fundraising efforts weren’t nearly as successful as I had hoped they would be. I was low on money, low on time, and for the first time on this journey, I was starting to run low on hope.
Centered in the middle of my mother-in-law’s garage — BoxedUp’s temporary HQ and my family’s home, in order to save money after leaving Amazon and fundraising.
To make matters worse, the Y Combinator (YC) rejection came 12 months into a seemingly endless pandemic, days after my first large institutional investor said “No,” and a mere three months after losing my father-in law to pancreatic cancer. I NEEDED this break.
I felt like it was “my time” after all of the sacrifices, grit, and setbacks my family and I had endured. Little did I know at the time, this was just the start of a long and treacherous road to closing out my Seed fundraising round nearly 11 months after my first pitch.
The Truth About Fundraising (Hint: Yes, it mostly sucks)
After that day, I stopped pitching investors and went back to the drawing board to determine what I needed to change about BoxedUp. How could I make us a “no-brainer” for venture capitalists (VCs) and accelerators? Well, that turned out to be one of my first mistakes. There’s no such thing.
There’s this fallacy among outsiders that VCs are “risk takers.” In fact, it’s quite the opposite. Nearly every step on the path to invest in a company is actually set up to de-risk their investment. Traction, momentum, other participating VCs, etc., are all pattern-matching mechanisms to help quickly compare your startup to other companies and teams similar to yours that happened to find success. VCs try to protect themselves and will also use the time during your pitch to determine how fast your company is growing, the likelihood you can successfully raise your next round, or a subjective measurement of your ability to generate an adequate amount of FOMO (fear of missing out) amongst other VCs in the space.
What I wish I would have realized earlier was that at the Pre-Seed and Seed stage, the process was mostly about vision, team, storytelling and network. While metrics were important, there was a significant emphasis put on warm introductions, pedigree, and things that make it difficult for anyone attempting to break into startup, let alone someone from an HBCU (North Carolina A&T) that most of the folks I talked to had never heard of. Some people tried to tell me, but it didn’t sink in until it was too late.
I launched BoxedUp while still working full time. Moonlighting was my own de-risking strategy; however, this scrappy approach backfired. People started to wonder why I hadn’t left my job. Why I wasn’t growing faster. Why I had yet to build a team, or bring on a co-founder. Didn’t they realize I needed money to do all of that? The answer, nobody cares. “The best founders find a way.”
So I had a choice: 1) quit while ahead and let someone else transform the sharing economy, or 2) double down and go ALL IN. With just a few weeks to survive and no clear path for a salary to support my family, I made THE jump.
It’s 100% Normal to Want to Quit, Just Don’t
I heard everything when I started pitching again:
“This round is a bit too early for us.”
“You are much too strong a founder to be working on an idea like this.”
“Your company does not align with the focus of our funds at this time”
“…still don’t think it’s a fit for us because of the business model”
“…the biggest concern with BoxedUp….is a fear of ______ potentially coming into the rental market at some point in the future”
100+ investors ignored my emails, went cold after the first sync, or eventually told me no. Their reasons varied but after a while, they all started to sound the same. It was times like those that I’d glance back at my old life and wonder if all the stress, debt, and long nights were really worth it.
Every now and then, I’d look back on my 2021 compensation review that I received just prior to leaving: $345,000.
THREE HUNDRED AND FOURTY-FIVE THOUSAND DOLLARS!?
What the hell was I thinking? Did I really walk away from that? Were the VCs right about BoxedUp? Was this stupid? Am I stupid? What would my friends say if they this doesn’t pan out?
The good news about all of those “No’s” is that they help expose the weaknesses of your business. The weaknesses in your pitch, your approach, your messaging. And, after a while, you become so numb to it all. You develop an ability to remove your emotion from decisions that don’t go your way and gain clarity on what needs to change based on their feedback. And after enough unsuccessful pitches, a couple of things were clear — I needed a team. There were too many unknowns for me and BoxedUp to be taken seriously by anyone.
Light at the End of the Tunnel
Then my first break came. A text from Biagio Sarich, my partner in crime from my Amazon days! He was an early check writer in the company and was curious about helping out in a larger capacity, possibly full time. He wrote,
“I’m still very interested in the business. I’m sure it’s hard to tell, but I’m wondering how much lead time you expect with regard to having a good idea of funding/to ideal start dates.”
Whoa! Help could be on the way if I could find a way to pay him. I wasn’t even paying myself yet but this was too good to be true. One of the most talented people I knew was interested in leaving his safety net to join. With that positive momentum behind me, my applications had a new purpose and confidence. BoxedUp would no longer just be Donald, but Donald and Biagio.
One of our first breaks, a small but confidence-boosting 1st place finish at Revolt’s pitch competition.
Then the next break. After winning a $20k pitch competition, Google’s “Black Founders Fund” selected us to join their second cohort. $100k in the bank! The “no’s” were still happening but they no longer felt make or break. Biagio would join in November and I had enough savings to fund my runway until February. For the first time, I felt like I had real momentum! I rode those wins to another $10k pitch competition, another YC interview to their next batch. Before long, with Biagio in the fold, I was also getting follow-up meetings with large funds that I could only dream of meeting just a year ago.
A few weeks later and Biagio and I were in Seattle, pitching another Amazonian who liked our idea. Shortly after drinks at Sam’s, he agreed to become our CTO. It was happening! The hard work was paying off! Then our largest break yet, “If you move forward with the Seed… we’d like to invest $500k.” After that commitment, our second commitment would come just days later. This time, a $1 million dollar commitment and from that point we were rolling.
The Takeaway
I launched BoxedUp in February 2019, packaging up orders myself, and renting things I had laying around our 1,620 sq. ft. home in Seattle. Now I run a three-person startup where we’re scoping commercial real estate options in Atlanta to scale our new headquarters. I didn’t know what it would become when I started but I kept going anyway. It never felt like the “right” time to do any of what i was doing, but I kept going anyway.
Regardless how bad it feels, take Nipsey Hustle’s advice. Allow yourself to feel the emotion but never quit. Raising this Seed doesn’t mean we’ll be successful. Other well-funded companies have tried and failed. But it means we’ve got a shot and that’s all I ever wanted. Thanks to my wife, close friends, mentors, family, and a few VC’s that believed in us, the kid from Seat Pleasant, Maryland has a chance to make history.
We took the 2022 pitch competition stage at SXSW just days after closing our Seed. A dream come true.
Written by Donald Boone, CEO, BoxedUp