Founders love to hate on venture capitalists, although for obvious reasons they usually aren’t willing to do it out in the open. The founder and CEO of ShipHero, however, got a little “salty” on Twitter about his struggles during a recent capital raising effort.
Aaron Rubin, whose company provides ecommerce fulfillment software, ultimately raised $50 million from Riverwood Capital at a $225 million valuation. He opened up about “some pain” involved in getting there in a series of tweets, describing “awkward” interactions with Andreessen Horowitz and getting a runaround from Battery Ventures.
During his call with a16z, “the awkwardness was on me,” Rubin acknowledged. “When I got on the call with A16Z I expected they knew who we were and I jumped right in...and totally lost them. I think they were scrolling our website during the call to figure out what we do.”
A back-and-forth with Battery Ventures was more of an ordeal. After Rubin was strung along for two weeks, the exchange ended in rejection. Worse, he was told the firm would make an offer during a final call, but apparently Battery’s position abruptly shifted before the chat, according to Rubin.
“...they said they wanted to make an offer. The partner wanted to be on the call, but the only time he had available was after business hours on Friday night, a time I usually spend with my family,” Rubin tweeted. “I logged on along with our VP Finance. 2 people from Battery were on and we spent 5 minutes of awkward waiting on the Zoom for the partner that of course never joined, his (very nice) underling let us know they decided not to make the offer.”
He was told the firm worried ShipHero was in danger of losing one of its biggest customers, even though the customer in question was “a huge advocate,” Rubin lamented. But Rubin, who had bootstrapped his company and was tapping the capital markets for the first time, kept going. He received offers from other firms, and secured a deal with Riverwood.
“Enough of me being salty, screw that guy,” he tweeted about the Battery partner. “It was an overall positive experience.”
Rubin’s tweet thread was unusually candid given the uneven power dynamic between founders and venture capital firms, and the strong desire not to upset people who write checks. Anonymous gripes are far more common. A website called VC Guide allows founders to review VC’s without giving their names, and it’s yielded some interesting results, according to what Thinknum found by scraping the site.
Whether Rubin’s outspokenness haunts ShipHero in the future remains to be seen. A Battery Ventures marketing executive didn’t reply when the Business of Business asked about the founder’s comments. It’s probably safe to say the firm is not overjoyed to see the back-and-forth aired in a public forum. But several founders and investors praised the thread.
“Thank you for sharing your journey,” tweeted angel investor Ben Pouladian. “There is always more behind the glitzy PR people post when they raise.”
We caught up with Rubin, who was willing to answer some questions providing more details about his experiences and why he chose to tell his story.
Business of Business: The biggest question, of course, is why did you choose to share your story publicly?
Aaron Rubin: I believe it’s important to be authentic and I enjoy sharing genuine stories – the good, the bad, and the ugly. I've shared a lot about my life on Twitter including thoughts of suicide as a young adult and a near bankruptcy of my first business in my mid twenties as well as a lot about my kids. I've made some real connections with people through Twitter. I love the Twitter ecommerce community and I contribute how I can.
Were you concerned you might get blowback, especially for naming names?
Not especially. The conversations I had with potential investors were very much the same - open and honest.
Given that this was your first institutional raise, how did the experience compare with what you expected? Were you prepared for dealing with the uneven power dynamic?
The process was fairly similar to what I expected. We were first approached by investors back in 2016, I knew there would be power struggles along the way – we were dealing with major investors. Over the past five years, there were always changing dynamics — at some points ShipHero was in a more powerful position, at other points we were in a less powerful situation. This shifting dynamic is why I knew how important it was to be thorough with the VC we chose. Riverwood, the investors we worked with, were good to work with throughout, regardless of where we stood in the power dynamics.
How long did the whole capital-raising process take? Was it longer or shorter than you thought it would be?
From us officially kicking off to signing a [letter of intent] was just a couple of weeks, I expected it to be longer. The due diligence took longer than I expected.
What was the worst part of the back-and-forth with Battery Ventures? It seems kind of cruel, for instance, to lead you on, ask you to take a call at an inconvenient time, and then spring these other concerns on you (and decline to invest).
I wouldn’t use the word "cruel" to describe the situation. I understand that I am very privileged to be having these types of conversations, I suspect many others have had much worse experiences but don’t publicly share.
Apart from the situation with a16z, was there anything else you wish you handled differently?
There isn’t. One point to make, I didn't realize how quickly the process would move along. I learned a lot.