While Debbie Wei Mullin was fundraising for her specialty Asian beverage company, Copper Cow Coffee, she encountered frequent skepticism about its appeal: “it’s a niche product.”
“I’d say, ‘taste it,’” Debbie says. “It’s not niche. It’s delicious coffee. It just so happens to be Vietnamese.”
As a Bay Area native whose mother is from Saigon, Debbie grew up with the strong, sweet drink. “Every time I introduce anyone to it, they fall in love with it,” she says.
Her instinct — that if there was an “elevated, more accessible version” of Vietnamese coffee — proved to be true. Within a month of launching the product in 2017, LA-based Copper Cow was in 1,000-plus stores.
To keep up with demand, she raised $1 million from friends and family and angel investors and went through the 500 Startups accelerator.
Just a year later, the world’s largest retailer took notice. “Walmart called us,” she says. “We didn’t reach out to them. It really stopped the naysayers who said this wasn’t mainstream.” Today, Walmart stocks Copper Cow in 1,000 locations.
Caffeine makes the world go ‘round
Debbie’s first foray into entrepreneurship was Wei Pantry, a line of Vietnamese cooking oils and vinegars. She launched it in 2014 while she was working full-time in her previous career as Consultant at the World Bank.
While the bootstrapped company had early traction, Debbie realized growth was limited. “Immediately, I got into a lot of stores and felt like I had validation, in terms of the branding, and it being a Vietnamese product,” she says. “But I definitely realized that the market is actually quite small — only 10 percent of Americans cook.”
As she looked to the future, Debbie started to pore over ideas that were venture backable. “I wanted a supply-chain focused business using my learnings from my experience at the World Bank.”
The market for coffee is comparatively huge, says Debbie. “70 percent of Americans drink coffee every day, multiple times a day, and 60 percent of them drink their coffee with milk and sugar.”
Coupled with the acquisition of Blue Bottle Coffee by Nestlé at $700-plus million valuation, Debbie knew the coffee market was massive — and thirsty for innovation.
“We’re building on the trends of pour-over and of people wanting clean ingredients in their indulgences,” she says.
Since Copper Cow wasn’t her first foray into specialty food, she could leverage her contacts from the Wei Pantry days. When she approached retailers who carried those products with the concept of Copper Cow, “it was easy to convert them,” she says.
She credits the company’s quick growth with her ability to build on relationships from the previous line, understanding how those sales channels worked, and offering something totally unique to the market. “That was very exciting for our first accounts,” says Debbie.
The perks of acceleration
With the goal of raising a seed round but in need of guidance, Debbie joined 500 Startups in 2018. “It helped brand us as ‘not just a coffee company,’” she says. “It showed people that we want to be a tech company. That’s how we’re going to grow, and how we’re going to win.”
The accelerator also helped prepare her to raise venture capital. “500 prepares you for the arduous task of fundraising,” she explains. “It taught me that it was a full time job. If you want to create a real market for your company, you have to be fundraising full time in order to start and close your round as quickly as possible.”
Take the bitter with the sweet
Debbie initially found investors through “a lot of trial and error,” she says.
Early on, she researched who had invested in companies similar to hers. Turns out, that strategy wasn’t so effective for Debbie. .
She found a coffee company that had received funding in the Valley a few years prior. “It was a big inspiration for me. I didn’t think that they were competitive with me, so I thought that maybe their investors would want to invest in me. But when I approached them, I learned quickly, after having really sought after those leads, that the company wasn’t doing well. And if anything, my company was an absolute no-go because it resembled that one.”
What worked better? “The biggest source of contacts was through other founders, especially those who were one step ahead, who had raised their seed round or their Series A.”
Debbie says it’s helpful to share leads with fellow entrepreneurs. “My investors tell me all the time that they’d love recommendations from me. If it’s at all within their scope, if I recommend someone, they’ll likely take the pitch.”
Stirring up interest
It might seem counterintuitive, but Debbie didn’t target food investors during her process.
They tend to have a strong retail focus, she says — but her plan for Copper Cow is to focus on other channels. “We’ll maintain the retail business,” she says. “It’s going to double this year, but instead of pouring our resources in to triple it, I’d rather do 10 times the sales direct-to-consumer via ecommerce.”
Debbie found that investors who funded cosmetics and fashion ventures, particularly companies built around a subscription model, were a much better fit, especially for “the kind of mentorship I need to grow that area of my business,” she says.
“500 Startups told me that I would have to have about a hundred meetings for every million dollars I wanted to raise. I found that to be accurate,” says Debbie. “I probably had about 200 meetings. About three-fourths of those were with actual VCs and about a fourth were to get leads to VCs.
“You’re trying to build the top of that funnel, because finding an investor who has money and is looking for a company just like yours is like finding a needle in a haystack. That’s why you have so many meetings.”
Debbie shares another piece of advice that helped her put things in perspective: don’t get worried until you’ve been told “no” 50 times.
“When you’re first putting yourself out there, it’s really excruciating. But since I’m so goal-oriented, it made it a lot easier to cross off 50 ‘no’s’ as opposed to hoping for a ‘yes’ at every meeting. Look at the math: if I take 200 meetings to get five ‘yeses’, I have to prepare to hear ‘no’ a lot.”
In the end, it took Debbie three months to close her $2 million seed round, led by Silverton Partners, which contributed half of the capital. CRCM Ventures, Montage Ventures, AmplifyHer Ventures and Social Starts also took part.
Just brew it
Looking back, Debbie wishes she had been more sure of herself throughout the process. “After you’ve built a company for almost two years with a bootstrap mentality, you’re always waiting for doomsday. You live in that mode, and you’re always expecting everything to go wrong. I didn’t prepare enough for what life would be like after closing.
“I am still struggling to hire people. I wish I had hires in place or lined up before I raised the money and with the confidence that it was going to happen.”
Although she built Copper Cow up to $1 million in revenue with the help of just one employee, investors wanted to know she was capable of building a strong team.
“I think I could have even been more successful at fundraising if I had people I’d been working with part time, even if it would have cost me a little bit of equity on the backend,” she says.
“It would have been worth it, both in terms of ramping up quickly right after closing as well as having a stronger fundraising round.”
Nathan Beckord is the CEO of Foundersuite.com which makes software for raising capital. Foundersuite has helped entrepreneurs raise over $1 billion in seed and venture capital since 2016. This article is based on an episode of Foundersuite’s How I Raised It podcast, a behind-the-scenes look at how startup founders raise money.