Shovels Feb 2023 Newsletter
There's a lot to cover, so I'll summarize first and then get into some detail for those who wish to read on.
- We raised a seed round from legit investors and angels, and I plan to gather signatures and checks next week! We'll announce details soon thereafter.
- We've had dozens of great conversations with property technology and construction financing companies.
- We have a roadmap and budget for the year.
- We increased our price to $1,000/mo per metro area.
- We also continue to work through data challenges -- to be expected in this corner of the Internet.
This is a pic of Luka and me amid a hero's journey through the mystical and enchanted world of building permit databases.
When I took this screenshot, we had recently discovered that there were 45 more permitting jurisdictions than we expected in the SF Bay Area. We'd just committed to a customer that we could scrape all of them. My screen froze during our meeting, and I took this pic.
Around this time, a friend and fellow entrepreneur texted me to ask how things were going with Shovels.
"We've hit the bogs," I wrote back. "We're plodding through the shit."
"That's my favorite part!" he replied. Usually, it's mine too, but I was stressed and worried at that moment. What else had I underestimated?
I did mention this was a hero's journey, right? A hero sets out on a high-risk adventure, encounters adversity, and overcomes it. The arc of entrepreneurship is one long hero's journey, but within that long arc are countless smaller ones. This data challenge is an example of one of those smaller arcs.
I'll cut to the chase: we set out to grab all permits in the SF Bay Area. We encountered much more work than expected, fretted for a couple of weeks, and then found a solution. Huzzah!
We're now purchasing raw permit and inspection data from a data vendor. Remarkably, this simple development led to a string of wins over the last couple of months. It's why I skipped the January newsletter -- I wanted to include the next win before sending it, and the wins just kept coming, so I never clicked send.
But here we are in mid-February, so I'm just going to send.
Lessons from our fundraise
It's never easy, but I have to say, it felt like we had something akin to "investor-market-fit." The firms that passed did so for a few common reasons:
- We're too early. Not enough revenue or traction.
- We're not focused enough on climate.
- They're not familiar enough with proptech / construction tech.
Our best conversations were with firms who:
- Believe in B2B and are willing to invest in new markets.
- Appreciate my background in VC and PE-backed startups.
- Like data-as-a-service business models.
A fund that I was excited about turned us down because they were too close to the contractor data market. He spent years working at one of the big contractor marketplaces. When he declined to invest, he gave me the best advice: "You need to find an investor who is as irrationally excited about this idea as you are."
This advice stuck with me, and I remained optimistic that I would find some irrationally excited funds and angel investors. And that's what happened.
I'll announce who they are once we're signed, sealed, and delivered 😁.
Lessons from my many customer interviews
If there's one piece of startup advice that I hear over and over again, it's this: interview customers from day 1... and never stop. I have taken this to heart. I have customer calls nearly every day. Usually multiple. I have learned A LOT. Here are some highlights:
- Like investors, the best meetings come from referrals. I get a call nearly every time someone we both know introduces me.
- Cold emailing is getting a lot harder. When it works, it works well, but it's a numbers game, and I have to get lucky.
- Proptech customers have many uses for clean and processed permit data. Their needs are unique, but our delivery is the same. They all want to store this data internally.
- Many would pay a premium for weekly or daily permit data refreshes rather than monthly updates.
- Construction banks can use our processed data for underwriting and loan draw decisions, but they need broad coverage to see the value.
- I've given quotes ranging from $500/mo to $10,000/mo. I love that. Our geographic coverage is the only thing keeping me from closing.
- We're hiring! We'd appreciate any candidate intros. Feel free to share these job descriptions:
- Data Engineer
- Intros to construction loan people. I want more interviews.
- Intros to developers who do 10+ projects at a time in the Bay Area. I need to learn more from this segment.
My next note will officially announce our funding round, and then probably we'll settle into a quarterly update to all of you friends and/or family and/or investors.
Thanks for your support!