By Jillian Harding MoneyWatch September 20, 2018, 11:17 AM Once a tender seed, The Sill is blossoming fast
For Eliza Blank, founder of budding houseplant seller The Sill, raising money to grow the business wasn't part of the plan when she launched the online delivery service.
Instead, after developing a business plan Blank got the company off the ground in 2012 with a dollop of capital raised in a crowdfunding campaign on Kickstarter. And in its early years, like many startups, the business was funded by sales and, sometimes, Blank's personal savings.
One resource Blank did have in ample supply — strong ideas about what makes a small business tick gleaned from her experience working in marketing and branding at hair product startup Living Proof (which was acquired by Unilever in 2016).
"I had real, complete exposure into the business," she said. "Being an early employee at a small company, not only do you have access to a CEO — I was given the opportunity to work on projects and initiatives that were beyond my pay grade. It gave me the confidence that I could start The Sill."
Planting the seed
Blank's Kickstarter effort netted $12,000 — a decent start, but one that "doesn't get you that far" in New York, Blank acknowledged. To move forward, she said, "The only way to raise money was to sell product."
And sell she did. Five years into the business, The Sill has fulfilled more than 70,000 orders and has two two brick-and-mortar shops in Manhattan, with plans to open more stores on the West Coast. The company also has built a 13,500 square-foot distribution center in New Jersey.
Growing The Seed gradually turned out to be key, said Blank, who grew up in Massachusetts and graduated from New York University. Most important, it gave the startup time to adapt as business conditions changed, setting the stage for the next phase.
Lately, that plan has included seeking outside funding to help drive growth, with the company recently raising $5 million in venture capital in a second round of funding.
"The first time was very challenging, because you're telling a story that nobody has ever heard before," Blank said of the challenge of raising money as a startup. "We were building a community and a consumer brand that you could tell was creating a movement in the industry. And I think that's what was most compelling to our early investors."
Telling your financial story
As a business owner looking to raise funds, one of the first questions to answer is: What will you do with the money? Then do a gut check. How young is the business, and how large — and quickly — can it grow?
For many smaller businesses, a loan or raising money from family and friends is often the best option.
"For those first starting out, they might think they are ready for venture capital when in fact they need something from family and friends or an angel investor from their network," Brian Pifer, vice president of entrepreneurship at advocacy group Small Business Majority, told CBS MoneyWatch in an interview.
Whichever route an entrepreneur chooses, telling a business' financial story begins with getting the paperwork in order.
"Do they have a specific need for the capital? Do they have all of their financials in place and business plans in place where it will make it easier if they have those resources ready?" Pifer said.
By contrast, for companies with robust sales that are looking to scale quickly, raising money from professional investors can jumpstart growth.
"There's that reality that you reach that point of, 'I've got this real business here…. I've got to throw gas on the fire, and the only way to throw gas on the fire is to raise capital,'" Rachel Proffitt, a partner at law firm Cooley who specializes in fledgling companies.
And that may mean sacrificing a certain amount of ownership in your business — equity — in exchange for the funds to take it to the next level.
On not taking no
For additional help, company founders also can apply to accelerator programs that provide mentors and expert consultants, and occasionally funding. These short-term (usually several months long) programs can help guide companies through the venture process.
One thing Proffitt warns her clients to expect plenty of: rejection.
"I tell folks to prepare themselves for weeks and weeks, if not months and months, of 'no's," she said. "It only takes one 'yes', but it takes fortitude. You've got to have a greater belief in your products than anyone else."
Blank echoed the sentiment. "It's just about showing up every day, believing in your idea, having conviction, knowing that there's going to be ups and downs but sticking with it — the only path to success is if you don't quit."