We, like many other people, are huge fans of the Beatles, and the news of the death of Sir George Martin, was terribly upsetting. As many know, George Martin, or “The Fifth Beatle”, as he was famously called, was instrumental in helping the Beatles become the most successful group in music history.
Image Source: The Guardian
Besides propelling the band to dizzying heights, George Martin is also famous for signing up with the Beatles after they had been rejected by every other label. By doing so, Martin, who was then the head of Parlophone Records, a subsidiary of EMI, went against the conventional practice of early pop business, where individual artists were considered more a draw than bands. Martin’s bet paid off, consequently, as the Beatles are now regarded by many as the greatest band of all time.
So, in the spirit of Sir George Martin, and his work with the Beatles, we look at some of the startups who were initially rejected by multiple investors, and the funds who were ready to bet on them when no one else would.
Sequoia Capital and LinkedIn
Looking at the giant Linkedin has become today, the fact that the professional networking portal initially found it hard to raise funds may come as quite a shocker. But in early 2003, LinkedIn spoke to 23 VC firms and was turned down. It wasn’t until the fall of 2003, when the company received two term sheets and finally selected Sequoia Capital, and closed a $4.7 million round in November.
Sequoia Capital (again!) and AirBnb
It might be unbelievable to think that AirBnB, arguably ‘the Beatles’ of vacation home stays, had a tough time raising funding, at a time when they were attempting to raise $150,000 at a $1.5M valuation in 2008. But the startup was indeed rejected by 7 venture firms in the beginning; well, technically 5, as 2 did not even respond. These rejections have been brilliantly captured in AirBnB CEO, Brian Chesky’s Medium post entitled, 7 Rejections.
AirBnb’s first raise finally came in the April of 2009, when it raised $600,000 from Sequoia Capital, and has since reached Unicorn status.
DFJ’s Tim Draper is Nutmeg’s lucky number 46
Founded in 2010 by Nick Hungerford, Nutmeg is an automated investment management service. Initially Nutmeg was rejected by a total of 45 investors, until Nick finally met Mr. 46; Tim Draper, Founding partner of leading venture capital firms Draper Associates and DFJ.
Draper was quick to say yes, after listening to Tim’s pitch, and other investors soon followed.
DFJ also comes to Hotmail’s Rescue
Hotmail is extremely well-known, especially to folks from the 90s. Today, we know it as Outlook, after Microsoft bought the company for $400M. There’s no denying its significance in the way we mail. So, Hotmail wouldn’t have any problems attracting investors, right? Not really.
In reality, Hotmail Founders, Jack Smith and Sabeer Bhatia, were turned down at least twenty times, as their idea of implementing an email service onto a web browser was completely untested. Luckily for them, Draper Fisher Jurvetson finally agreed to fund them, and history was made.
FanDuel’s Big Three – Pentech Ventures, Piton Capital and Scottish Investment Bank
Today, Fanduel may (or may not) have retained its unicorn status, but it is indisputable that the Fantasy sports gaming company has come a long way since its conception. Along the way, the fantasy league platform that was founded in Edinburgh but is now headquartered in New York, faced rejection from over 80 investors before finally closing a $4 million Series B funding round from Pentech Ventures, Piton Capital and Scottish Investment Bank in 2011.
Today, the firm has raised more than $361M, and its investor list includes the likes of Comcast Ventures, Bullpen Capital, Time Warner, Shamrock Capital Advisors, NBC Sports, Pro Channel Sports Games, Google Capital and Kohlberg Kravis Roberts & Co.
These are just a few examples of startups which were unable to raise initial funding, and many companies, large and small, face a good deal of initial rejection from investors before persevering. Fortunately, these companies, and many more, have fought on, and have grown to be huge companies, and we have the investors who dared to believe in them to thank for, just as we thank Sir George Martin for the Beatles.