Wendy Tan-White, Moonfruit: Ups & Downs of Fund Raising

Transcript follows & video below

Could you tell me briefly about your past history in raising investment for your company Moonfruit?

Yes sure we’ve got quite a long history. I actually started Moonfruit in the first dot com boom in 1999. I actually came out of the first UK Internet Bank which was called Egg which was one of the biggest floats around that period. I had a background in computer science but I moved through different financial services & consultancies & then to banking. I looked at the area of community because we were looking at what drove people to do things online for the internet banking world. And really Moonfruit originally was about people trying to share their passions online but also about trying to remove the barriers of technology. For a lot of people the thought of actually trying to publish anything online 10 years ago was virtually impossible. That’s how we really started. We were quite lucky I think, my old mentor Egg actually seeded the business along with our founders ourselves we also seeded the business & we built our first prototype. We were quite lucky at the time, Bain Consulting had set up an incubator & they kind of discovered us in our attic in Soho. Then invested the first GBP400,000 of seed funding. The only problem was as with the wisdom of those days, I think a lot of people coming out setting up internet companies in those days came out of corporate. Also technology was expensive. There was no such thing as variablized costs of cloud computing. You really had to buy the hardware. So the wisdom then was to raise an awful lot of money. Also the other thing you have to remember is there wasn’t anything like online advertising. You couldn’t pull people who were online to your product. A lot of people were offline & you were using traditional marketing methods of print, tv, etc, which is very expensive as well. With the help of Bain Consulting, we actually packaged up a serious business plan. Then we actually raised another GBP6m from LVNH, Louis Vuitton the big luxury brand investor. At the time we were using flash to build our product which in those days was cutting edge. The reason we used flash was because we wanted to do a literal drag & drop sort of product so you didn’t need to code. So basically it’s a website builder a bit like powerpoint, building in powerpoint. Because of what we were doing, really pushing the boundary with flash, Macromedia who owned flash, who have now been bought by Adobe themselves, invested GBP1m too. So we actually raised a lot of capital. However we actually scaled extremely quickly for a small business we went from zero to 60 people in about 6months. It was quite extreme, we got good press & we had something like a couple of hundred thousand users straight away. But the product was slow, basically we didn’t have broadband in those days & we were trying to monetize through ad revenue visitors. To be quite honest it wasn’t getting a lot of traction in those days. Many companies who did the same thing at the time. When the dot com crash happened, our portfolio investor LVNH decided to close it’s portfolio of about 52 companies. It finally did that because it had already made it’s return of full fund by selling LibertyServe, one of the biggest ISPs in Europe. It was a difficult time, it was obviously a difficult time for us. But I think we were unusual because we had a good relationship with LVNH & we also had people actually using the service so they actually gave us the option of buying back the assets of the business for a fraction of the price. It was a difficult choice to make because it meant we actually had to take the original business insolvent. So we had to go through the whole insolvency process which was pretty painful. We had to let go 58 out of our 60 employees so we went back to myself & my cofounder Eric. I had to actually sack my future husband, my future mother in law & a lot of people I was very close to. I think when you start a company like that & you grow that fast, people aren’t just giving you their money, they’re giving you their hopes & their dreams as well. When something collapses, that goes to. So it was quite a difficult period cleaning that up. But I think we made a choice that we hadn’t finished yet & so we carried on. So we went back to our attic & started again.

Wendy Tan-White

Amazing, what courage & I certainly know that heartbreak but yours was on quite a big scale. Amazing that you survived that & still have that spirit of adventure & willingness to give it a shot again.

Yeah we had our moments where I did wonder whether I should just let it go but I think we just felt we hadn’t finished yet.

Wendy Tan-White

What personal lessons being a woman have you taken out of your successes &/or failures in that regard?

I’ve always been in the worlds of technology & finance and I suppose I’ve always felt that you always do your job or your skills very well. Some would say maybe you have to do it better, maybe? But I think particularly the technology industry & found it pretty supportive. Maybe it helped because I’d had a computer science background. Most people never pull the can’t dev card, so that helps. And in some ways you can actually stand out if you’re clear & you know what the business is about that can actually help in a way, particularly nowadays to so many people. They remember who you are. I think also it’s about having the right team. I think it’s the same for anybody, male or female, you have to make sure that you have the other skill sets around you. I think Dave McClure puts it very well, he talks about a founding team needing a dev, basically a hacker, a designer & a hustler or a marketer or sales person. I think that’s right, I think you just need to know that yourself. On the whole I would say what a lot of women are better at is communication, whether they’ve got a dev background or not & also people skills. What happens is the female entrepreneurs get naturally pulled into a role of communication or sales or team management. I think maybe that’s where that makes a difference.

Wendy Tan-White

So there were no biases that you felt during that time & you think obviously your background & your degrees helped in easing that passage?

Yes I think so & I’d also come straight out of college I went to Arthur Andersens, the accountancy firm so I had a business & I had a dev background. So maybe the balance of the two helped? I think the stats are against it. I think of the 52 companies LVNH invested in, there were only 2 female cofounders. So it still statistically wasn’t pro-female in those days. But I think it’s also a lot about whether women want to do that role or not too.

Wendy Tan-White

Would you have any tips or any advice for women who are thinking about becoming entrepreneurs or who have startups that they are thinking of raising funding for?

Clearly statistically there are difficulties, less women go into raising venture capital. But I think a lot of that is about just believing in your own business. I kind of said the story about how we collapsed in 1999. We actually at that point grew through pure bootstrapping. We charged for our products & we actually grew the business so its 18-20 people & actually profitable. In the last 2 years we’ve actually had a lot of traction. We started increasing our revenues, increasing our growth. We then raised another Series A in September 2010 & recently an Angel funding from Dave McClure, 500 Startups to push our growth in the US. I would say going out raising money this time round. I actually think it’s a fertile time for women led businesses. Just looking at research & looking anecdotally our business a year ago 30% of our customers who were building websites were female. Today 42% are females. So there is definitely a movement of women setting up more businesses online & using software to do so themselves. Obviously we are a non-tech product so that helps but still. The other thing we are seeing in the US, I think women led businesses are the highest sector of growth right now in small business in the US. We’re seeing this in the UK. The other thing if you even take the top 4 consumer tech businesses, facebook, Twitter, Zynga, Groupon, more than the majority of their customer base is female. So there is female buying power out there too. I think between the growth of women led businesses & the growth of the consumer power of women, I think venture capitalists are seeing there is an opportunity out there. VCs are fundamentally opportunists, they’re about making returns from growing markets. If they see the potential in it, they will invest in it, which is an advantage for women who understand their customer base.

Wendy Tan-White

Yes it makes sense & other people have given me that feedback that this is a great time for female entrepreneurs. Thanks for that.

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