How We Just Raised $6M At An $80M Valuation From 100+ Investors Using A Link (Without Pitching)
Three years ago, Lawtrades almost went bankrupt.
We’d failed to raise a Series A or generate any interest among VCs.
Last month, we closed $6M in funding (at an $80M valuation) from more than 100
customers and investors, using a link and no pitching.
Here’s how it happened, step by step.
First, we pivoted, redefining our business
While we watched Justin Kan raise $75M for Atrium — a competing legaltech startup at
the time — Lawtrades managed to raise only $3.7M. By comparison, we looked like a
bit player, unworthy of serious interest.
We faced an existential decision: Shut down the company or try something radically
different.
As I’ve written previously, it was a pivot that saved us. Our initial focus on small-to
-midsize businesses (SMBs) attracted a lot of customers — who, unfortunately,
weren’t profitable. SMBs often needed legal services on a one-off basis, meaning
low fees and lots of churn.
But fast-growing tech companies were different. Their general counsels (GCs) needed
ongoing support on a near-daily basis — higher fees and lower churn than SMBs.
So, we “fired” all our unprofitable customers and sharpened the product specifically for
power users. We borrowed against our receivables to keep growing without dilution.
Little by little, the bet paid off, and we scaled our revenue 10x, from $70k/mo
to $700k/mo.
Then, we decided to revisit fundraising (and do it differently)
This time, we were in a unique position. Lawtrades was cash flow positive for most
quarters of last year, meaning we could dictate our own terms, rather than letting
VCs do it for us. That was convenient, because VCs were still sour on legaltech
since Atrium shut down (though they were thinking about the space).
We neither wanted to rely on VCs nor dilute more than 10% equity. So, instead of
vying for in-person pitch meetings, we went about it a little differently.
We set up an AngelList Roll-Up Vehicle (RUV). Through an RUV, any accredited investor
can contribute, up to 250 individual investors in a single round. Our first step with the
RUV was to email it to our customers. Why? Because fundamentally, I wanted to
enrich the people that are making our platform rich.
Imagine if Uber had an RUV that allowed all drivers to invest, or if Airbnb let all
Superhosts invest. In all cases — theirs, and ours — human beings make the
platform what it is. Giving those human beings a chance to put some skin in the
game, becoming primary investors, just compounds their loyalty.
After some initial interest, we took it even broader
We created a Journey link, containing everything that would normally go in an investor pitch:
- Slides
- Video pitch (from me)
- Investor testimonials
- Product demo
- Financials
Doing it this way, we could also include a link to our AngelList RUV — and send the pitch
to a theoretically unlimited number of people. Rather than a 1:1 pitch-to-investor ratio,
we ended up with something more like 1:10,000.
We dropped the Journey link into the RUV Alliance Discord channel. Right away, more
than 600 accredited investors saw it. Customers became investors, investors became
customers, and within days, we raised $250,000.
That grassroots enthusiasm drew interest from Stonks, where we live-streamed
our pitch to thousands more viewers. This is where things really took off — we
got $1.4M in commitments from people I’ve never met.
We shared these updates via Pump, which stirred up even more buzz. I got DMs and
emails from many more investors — executives at Facebook, Uber, Netflix,
Robinhood — all wanting to invest. This included Sahil Lavingia, who had initially
rejected us, but ended up giving us $100k.
We leveraged the groundswell of support to close the round
By this point, we’d raised $2.3M without a single pitch meeting. It was a result of natural
enthusiasm: taking care of the people who made us who we are, giving them the chance
to move first, and letting their enthusiasm drive our leverage with VCs — who, by this
point, got interested.
We leveraged those network effects to secure $3.7M from a founder-turned-VC, closing
the round: $6M raised at an $80M valuation (which, by the way, I set myself).
What flipping the fundraising script allowed us to do:
Instead of hoping for 2-3 VCs to constitute the round, we inverted the process, starting
with private individuals and using their enthusiasm to show VCs what we were worth.
This gave Lawtrades the ability to:
- Share our vision at scale without meetings. Our Journey link was seen by
thousands and thousands of people. I ended up taking meetings with people who
planned to contribute $50k+, but still, the ratio of views-to-meetings was
outrageously good for us.
- Create our own leverage. It ended up that, instead of selling ourselves to VCs,
VCs sold themselves to us. We actually had to turn away some people whose
checks were too large, or who wanted to jump in too late.
- Maintain voting power. We didn’t give up any board seats.
- Leverage viral network effects. Power to (and from) the people.
- Preemptively halt churn by turning our users into owners. Again, when
people own something, they’re more likely to treat it with loyalty and respect.
Our users make us who we are — no matter how good our tech is, we need
human beings to use it. They deserve to be owners.
For now, most founders are still wary of this approach — and I don’t blame them. Pump
is less than a year old, RUVs are less than a year old, it’s new, it’s scary. But it won’t
be that way for long. Our approach redistributed some of the power that normally
lies entirely with VCs, putting it into our hands and our network’s hands.
This is the future — one more way that power is flowing away from the centralized few,
toward the decentralized many.