CEO of Foundersuite.com, which makes software for raising venture capital and managing investors.
From raising money outside of Silicon Valley to pivoting after hitting a fundraising wall, to dealing with tornados and pandemics - Jammber founder Marcus Cobb shares his top tips for startup founders.
While Slack, Trello and Airtable are commonly used for project management in certain industries, that wasn’t the case in the music industry. For a long time, music pros didn’t have software readily available to help manage the music creation and distribution workflow across teams.
Marcus Cobb set out to fill that gap in the market when he founded Jammber in 2013. Jammber started out as a workflow management tool that helps everyone from songwriters, instrumentalists and managers collaborate on songs.
It seemed like an idea that would immediately catch fire, but as with most startups, growing Jammber wasn’t quite as easy as Marcus anticipated. That was due to several issues, including being based outside Silicon Valley, and a limited market for its product.
“The music industry is a bit of a mirage in the desert,” Marcus says. “It looks a lot bigger than it is because the money is pulled in certain key areas.”
Ultimately, these challenges served as lessons. In an episode of How I Raised It, Marcus shared insights for fundraising under tough circumstances — from surfacing discreet angel investors to pivoting to skyrocket growth.
Throughout Jammber’s first five years — starting out in Chicago and growing to a second office in Nashville — Marcus relied on angel investments to grow the company. Being based in the midwest and Southern United States, however, meant finding angel investors wasn’t always easy.
“The money in Nashville is Southern money, and it’s very discreet,” Marcus says. “They don’t even advertise that they’re angel investors.”
Marcus’ approach? Draw the investors to you, instead of knocking on their doors.
Marcus rehearsed his elevator pitch for three weeks straight, and then began pitching audiences wherever he could, whether there were two people in the room or 500. At Chicago Ideas Week, a nonprofit conference focused on surfacing innovative ideas, Marcus and his team had attendees play a simple board game that demonstrated how Jammber helped teams collaborate. Participants roleplayed being a musician or a record label, and saw how Jammber was able to streamline their collaboration processes.
Two months later, an angel investor — who had attended the event — reached out via Jammber’s online contact form. That person ended up investing $1.2 million into the company.
“Part of your job as CEO is to generate buzz and inbound interest by telling a story that translates and carries,” Marcus says. “I try to relate the vision and any amount of charisma that comes through, and then, inevitably, people find you.”
It’s an approach that worked for Marcus: By late 2018, Jammber had closed a $3.4 million angel round.
As a tech startup tackling a meaty problem in the music industry, Jammber’s team could have chased after some big celebrities and record labels as potential funders. After all, over the past few years, everyone from Lady Gaga to T.I. has become an angel investor.
For Marcus, going the celebrity route didn’t make sense.
“I didn't want to burn a lot of time competing, and I didn't want to go into deals that were leveraged due to celebrity status,” Marcus says. “I think a lot of times people don't add anything to your brand. They make great headlines, but they don't make your business more lucrative.”
Marcus turned down capital from big record labels and a potential acquisition deal from YouTube. Instead, he joined a three-month music technology accelerator, Project Music, that helped connect him with mentors. Those mentors put him in touch with key angel investors.
In 2019, Jammber also accepted early-stage seed funding from Rise of the Rest, a nationwide seed fund that works with seed-stage companies specifically outside of Silicon Valley, New York City and Boston. It was a tactical decision: As a community-oriented fund, Rise of the Rest not only helped Jammber raise a $2.2 million seed round, but they also provided the startup with mentors, advisors and tools.
While Marcus’ careful partnership decisions revolved specifically around the music industry, it’s a lesson every startup should learn: focus on the investors who can provide you with exactly what your business needs, versus chasing after big names.
In late 2019, with a seed round behind them and the need for more cash to fuel their growth, Jammber was waiting on a $1 million investment from an angel investor. At the eleventh hour, the deal fell through.
Nashville was then hit by a devastating tornado, with the COVID-19 pandemic swiftly on its heels. Jammber’s future looked bleak: It was a bad environment for fundraising, and the workflow management tool simply wasn’t bringing in enough money.
“We were just stuck,” Marcus says. “We just said, ‘Look, guys, there's no help coming. We only have a few months in the bank.’”
In a Hail Mary move, the Jammber team held a hackathon to figure out their next move if no more investments came in. The idea that emerged became SplitPay, an enterprise solution enabling distributors to share royalty payouts. The tool has since become Jammber’s main offering and the pivot to this new offering has helped them grow 50x.
“We went from 50,000 users to upwards of 2.5 million,” Marcus says. “And the only thing that changed was the conversation, out of necessity.”
His advice to other founders from the experience?
“Ask yourself, how would you do this without capital?” he recommends. “I appreciate all my amazing investors — but capital is so tempting. It's so leveraged. What would you do if you weren’t going to raise capital?”
Nathan Beckord is the CEO of Foundersuite.com, a software platform that has helped entrepreneurs raise over $2 billion in seed and venture capital. This article is based on an episode of Foundersuite’s How I Raised It podcast, a behind-the-scenes look at how startup founders have raised capital.
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