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- Hydrant, a health and hydration direct-to-consumer startup, announced Thursday that it secured $5.7 million in Series A funding.
- Cofounders John Sherwin and Jai Jung Kim said they managed to secure the latest round of funding without the use of a standard pitch deck.
- “A lot of our peers were surprised that we were able to close this round without a deck,” Hydrant cofounder Jai Jung Kim told Business Insider, explaining how the process was more a gradual correspondence with interested investors who knew the industry well.
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It might not be a popular trend just yet, but some startups are forgoing the standard pitch deck in their fundraising efforts.
When a startup looks to raise money from angel investors, venture-capital firms, or other backers, they generally create a “pitch” about the business, which incorporates data and storytelling into a slide-show presentation.
In the case of Hydrant, a health and hydration startup, taking a contrarian approach had a nice payoff. The company, which launched in 2018, announced Thursday that it secured $5.7 million in Series A funding. And it did it all without using a pitch deck.
“A lot of our peers were surprised that we were able to close this round without a deck,” Hydrant cofounder Jai Jung Kim told Business Insider, explaining how the process was more of a gradual correspondence with interested investors who knew the industry well.
‘There’s no formal presentation throughout this,” echoed Hydrant cofounder John Sherwin. “It was really just a case of building relationships and trust from very early on.”
Hydrant’s latest fundraising round, which was led by Coefficient Capital with participation from Rx3 Ventures, brings the company’s total investment to date to $8.8 million. Cofounders Sherwin and Kim revealed how they managed to secure Series A for Hydrant by utilizing a few key tactics in place of a standard pitch deck.
Here’s how they did it:
Sherwin and Kim started the relationship with investors really early on
“I think we started to engage with our Series A investor almost right after our seed round,” Kim said. “And we thought this was really important so that they can start to develop a relationship with us — or we develop a relationship with them — so that they can get to know us and then develop a trust.”
Sherwin added that Kim, who was generally in charge of speaking to investors in the early stages of fundraising, made a powerful move by starting the process as early as he did.
“He kept a number of different potential investors warm throughout that process,” Sherwin said. “He met with them, shared our vision, shared that we were hitting those metrics in person.”
Kim added that when looking for potential investors, it is hugely beneficial to find investors that already understand your company’s industry. In the case of Hydrant, Kim said the investors were familiar with the ins and outs of hydration powders and had a deep understanding of the potential of the market.
“It was a matter of them deciding which horse to bet on,” Kim said.
The Hydrant team was laser-focused when speaking to investors
“I think a lot of times, with these pitch decks, it focuses around a lot of storytelling, a lot of fluffy messages or the vanity metrics,” Kim said, adding that such elements aren’t always what matters when it comes to winning over investors.
Instead of telling a story about the brand, the Hydrant team focused on what they knew mattered to investors in determining whether they were worth Series A funding.
There was no official presentation that revealed this data. Rather, Kim regularly updated investors about how Hydrant was progressing on certain metrics like growth and retention rates and he communicated this information through regular emails, calls, and in-person meetings. The email updates often included bullet points and charts that outlined how the company was hitting these financial metrics and milestones.
The team focused on proving its ability to execute a vision and plan
Kim said one of the biggest mistakes that a startup can make in the fundraising process is to outline a huge vision and then miss the mark, which disappoints investors.
“From early on, as we were engaging with Series A investors, we shared exactly what kind of metrics we want to hit in the year and then what kind of milestones we need to achieve,” Kim said.
The next step was to demonstrate a consistent ability to hit or exceed those plans on a consistent basis, which Hydrant did, thereby proving that the company was ready for a larger investment.
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