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Thank you all for your words of encouragement regarding my recent posts about DataSync. In the mist of the thrill of what’s going on, I feel I need to recognize a couple key truths:

1. This happened because of God’s blessing and hard work by a large group of people. It didn’t happen just because of me, but I’m honored to be a part of it all.
2. This is just the beginning, we have a long, difficult road ahead of us.

I firmly believe that this project is working because God’s hand of blessing is on it. At most times it wasn’t deserved. Success is built on so many ‘chance’ encounters that I choose to believe stuff like this isn’t chance. God chooses to give and take away, and in this season he’s blessed our work.

In addition, we got funded because of a team at DataSync that was relentless. The people behind this project believe in it as strongly as I do. They kept hammering on it through the dark times along with me, and I’m grateful for all of their help. Second, our advisory team was instrumental in getting this project moving. Mari Beth Baumberger (Enterprise Institute), Al Kurtenbach (Daktronics), John Hemmingstad (Small Business Development Center), and my entire seed advisory board contributed greatly.

It’s easy to bask in the glow of winning, but that would be very short sighted. A close adviser told me this today: “You’ve graduated, Congratulations! Enjoy the moment… You now have significantly more at stake… it’s time to get serious and lead your team to the next level. Ready?”. I am ready. The rough road has just begun. It’s going to get more challenging for the company in the coming months and years. After all, we’re growing into a shrinking economy. It’s not going to be easy.

However this company is built on the principles of faithful, diligent, and outright hard work. We’re going to be up against great challenges and difficult decisions. We will prevail.

Thanks for sharing the journey with me!

For those of you who are watching the company I run, DataSync, you’re probably aware that we raised our Series A venture funding back in December, 2008. It was quite the journey.

According to a recent article by the Angel Capital Assocation, early stage investing went down in 2008, and will probably drop more in 2009. Because of the recession, angel groups are focused on ensuring existing portfolio companies survive, so they are spending less on new startups. Raising capital wasn’t easy to begin with – fewer than 1 in 100 companies actually acquire venture funding (src: Launch Utah). That number is probably worsening every day.

So how did we do it? The answer, in my opinion, is found in more than one factor:

1. Low capital requirement – It takes a lot less capital and time to get a software company launched, compared to ‘invention’ or research type companies. This put DataSync in a great position to ask for capital now – we didn’t need a lot of dough, have fast growth potential, and an ‘annuity’ type income stream.
2. Product already in marketplace – We already have a significant and growing customer base, so investors have the assurance that our product would actually generate revenue.
3. Product sells well in a bad economy – DataSync offers software that requires very little upfront and recurring cost and has an immediate payoff to our clients. Often our clients save money the first month.
4. Great advice – The Small Business Development Center built out our financials and advised heavily on positioning the deal, the Enterprise Institute worked with our value prop for investors, and RAIN Source Capital helped wrap out the deal with their capital network. Solid, experienced advisers are key to successfully raising angel capital.
5. Unshakable belief in our vision – I believe wholeheartedly in what we’re doing at DataSync: providing businesses with the best software, consolidated it, and delivering it for a competitive price. That’s what we’re all about at DataSync. We live it, we breathe it, we’re going to make it happen. You have to have that level of belief in your vision to fight through obstacles. We have that desire.
6. ‘Hardiness’ and tenacity – Hardiness is a word we use a lot around DataSync – one definition is “capable of surviving unfavorable conditions”. It took us a year and more presentations than I care to remember to raise capital. We knew we could execute on the goals we set, so we kept knocking on doors until we found investors who saw promise in the same mission.

If you’re running a company that’s poised to succeed, but need capital to get there, take heart. A bad economy weeds out bad ideas and people who aren’t as committed as you, giving you a long term competitive advantage. However it’s not going to be easy to get there. Make sure you have a solid idea you can believe in, build a network around you to best position your company, and network around the clock to find investors who believe in your idea. You’re going to have to beat the odds. After all, you’re trying to be the less than 1 in 100 companies who actually gets funding. It’s not supposed to be easy.