How Can a Startup Get Funded?

“I think we got pretty lucky with our funding experience,” said Seismic Games' CEO and co-founder Greg Borrud.

“From the day we decided to start to raise funds to the day we closed was about four months. And we had never raised funds for a company before.”

Borrud's new startup recently announced that it had acquired $2 million in Series A funding. His previous company, Pandemic Studios, was built without the help of investors.

“Pandemic never had investors and was literally built from one development deal to the next,” Borrud told Benzinga. “So it was a real education for us going through the entire process and learning everything about raising money. We knew that we would mostly be looking at angel funding since we were going to be early stage, so our focus was on finding a lead angel investor.”

Borrud said that the plan was to then “supplement that with our other angels.”

“We started by pitching some people we knew in Los Angeles who we knew had done some angels investing,” he said. “We also started talking to a couple law firms who could not only handle the negotiation, but could also put us in touch with some potential investors. It was through our law firm, Sheppard Mullin, that we were introduced to Tom Matlack – an east coast investor. We ran through our pitch with Tom via Skype and I remember his reaction afterwards was, ‘Hmmm – I'm not sure why I wouldn't do this.' Within a couple of days he had called us back and said that he would like to lead the round.”

Once he had the lead in place, “it became much easier to close with the rest of our angels,” Borrud explained.

“We have 14 other angels in the first round. We started negotiating with Tom on the deal terms and around this same time we were introduced through an agent at CAA as well as another law firm in Los Angeles, Stubbs Alderton, to DFJ Frontier – an early stage VC investor specializing in tech investments on the west coast. DFJ was very interested in what we were building and asked to come on board as a co-lead with Tom. We were thrilled to have them join the team.

“Not only are they great partners, but they bring a great support infrastructure to help us in the early stages of building our company. So with Tom and DFJ Frontier, along with the rest of the angels, we wrapped up the paperwork and closed on April 15, 2011. Then the fun of building the company began.”

Despite the challenge of acquiring new funds, Borrud said that he does not have any horror stories to tell. “It was incredibly smooth sailing and we realize that we were very lucky,” he said. “The biggest challenge was the crash course in raising funds that had to happen. We were talking with people who have been doing this for decades and although we had run very successful companies before, we had never had to go through the process of raising money. Fortunately it all went pretty smoothly.”

“Most of the people we pitched to ended up investing in Seismic,” Borrud continued. “But we did talk to a few people who ultimately did not invest but were very instrumental in helping us shape the way we thought about the company and our business plan.

“Specifically, Rick Thompson who was the co-founder of Playfish, and Mark Suster from GRP Partners, were great at asking the tough questions and getting us to think about our business in new ways. Also, Greg Richardson from Rumble Entertainment was an amazing resource. It was important in the early discussions to pitch the ideas to people we respected and really think about our business in a meaningful way.

“We didn't take everyone's advice, but we used these conversations internally to really challenge our own beliefs to see if they could stand up to scrutiny or not. And when they didn't, we were quick to think through solutions and implement them into our vision.”

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