Leo Widrich: How to raise 500k in dollars and users
How To Become The Number One Sharing Standard On The Web
Buffer has been profitable pretty much right after its launch. Still their founders raised quite an amount of money whilst building a decent community of half a million users. Leo Widrich told us how they did it.
Founded in late 2010 by British Joel Gascoigne and Austrian Leo Widrich (see inventures.eu’s profile on him here), Buffer aims at creating a smarter way to share content in social media. The app, which was originally developed as Twitter integration, now also lets you share content on Facebook and LinkedIn. The company currently claims to have more than 500.000 registered users. Its user base was not an overnight success but planned out by partners Joel and Leo.
Leo Widrich of Buffer Define your business model
The tool is based on a freemium business model. While the free version lets you stake only a limited amount of posts and accounts, the paid premium version entitles you to handle more. As of now, Buffer generates a monthly income of 70.000 US dollars. Joel states that his team is focusing on increasing the overall user base so that paid accounts will also grow naturally. Their quantitative goal is to reach one million users within the next year.
Raise know-how, not money
To execute their plans, Joel and Leo began raising seed money last summer. The amount of money they were going for was 500.000 US dollars. “Raising money is really tough“, Leo admits. Being part of the AngelPad incubator was an important springboard for the startup and allowed them access to a lot of well-known angel investors.
While it’s indisputably hard to be rejected, Leo advises to get yourself up the next morning and still hold on to your idea and be persistent. Eventually, Buffer received 450.000 US dollars from 19 investors. Leo emphasises: “When raising in seed stage, it’s not about the money but the connections and know-how the angels can provide.“
Meet and support influential people
A helpful tool to get started is getting advisors on board. The first one to support Buffer was Hiten Shah, co-founder of KISSmetrics. Leo also refers to him as a mentor and checks in with him on a regular basis. Another advisor worth mentioning is Guy Kawasaki. Joel and Leo met the Social Media icon behind the scenes at an Evernote conference. Kawasaki was holding the keynote speech there, and when the Buffer guys showed him their product, he was instantly hooked on it.
The “pay it foward“-spirit definitely came in handy for Buffer in regards to building a network. The European entrepreneurs apparently already adopted this mindset by wearing shirts with logo prints from other startups such as Feedly or Trapit to support them.
Spread the word and engage users
Prior to raising money and finding advisors, the hard work was to build an audience. When Leo joined the startup, he took over marketing and promoting the service. He wanted to create an organic buzz around Buffer and did so by blogging and contributing to other blogs. He wanted to spread theword not by over-promoting Buffer but by providing valuable content such as Twitter tips and life hacks. The Buffer blog itself has become a prominent source of life improvement tips and business advice. This buzz led to press coverage and this publicity in turn played a vital role in getting a visa to work in the United States, Leo recalls.
Since Buffer is already generating revenue, the team is lucky enough to have kept most of their seed money on their bank account. While it’s common for startups to start the next fund raising round 18 months after seed stage, the founders have not made plans on when to start looking for new investors, yet. Right now, the company is focusing on providing the best customer support out there and reinforcing partnerships.
To extend Buffer’s reach, business developer Leo talks to other reader and sharing services such as Flipboard and Kippt to integrate Buffer into their products. Chief hacker Tom is in charge of improving their iPhone app and probably also developing ones for Android and Windows Phone.
Buffer’s ultimate goal is to become “the number one social sharing standard“ on the web. The founding team hopes that their strategy will lead the startup to further success.
To Austrian startups Leo appeals, “Get out of Austria, honestly. The vibe in Silicon Valley cannot be compared to any other place in the world. You have to be part of it.“ The relationships and network Buffer has built in the past two years wouldn’t have been possible if they were located in Leo’s home country, he claims.