Raise money for your startup without asking for it, with Shannon Goggin, CEO of Noyo
And secret weapons for investor update emails, staying aligned remotely, and early signs of PMF.
Welcome to Product Market Misfits’ email, where we help founders go from idea to product/market fit faster by extracting bite-sized knowledge from podcast conversations with venture-backed founders! To listen to the full podcast episodes, you can visit our website.
I had the amazing opportunity to interview Shannon Goggin, CEO of Noyo, and I’m happy to bring to you some helpful nuggets of startup wisdom from a seriously talented founder. If you missed the full podcast episode (32min), here’s a direct link.
Company Overview: Noyo.com is the API platform for the health insurance industry, like Plaid does for fintech and Stripe does for payments. Noyo just raised their $12.5M Series A last week, led by Costanoa Ventures and Spark Capital. Prior investors include Core Innovation Capital, Garuda Ventures, the Webb Investment Network, Precursor Ventures and Homebrew. They all upped their investment in the new round.
How To Raise Money Without Asking For It?
At the same time Shannon was sketching out the idea for Noyo on a bus, she was already talking to investors about the idea. But she wasn’t asking for money!
Shannon reached out to VCs way before she had a pitch deck because they’re pretty helpful people to talk to about starting a company! Shannon spoke to them early and often because she wanted to include their valuable feedback on the front end of her idea, instead of on the backend after dozens of decisions had been made. The goal wasn’t to ask for money- it was to get real advice about her earliest decisions.
These non-pitchy, genuine conversations built the foundation for a strong relationship with potential investors. As Shannon & Noyo progressed, these casual, sometimes text message based conversations with investors were essentially little mini investor updates!
As they say, VCs invest in lines, not dots. Read more on “lines, not dots” here from Upfront VC:
So, by the time Shannon was actually ready to raise money, the first investors already knew the founder, the pitch, the progress, and everything else!
Shannon used this strategy to put herself and Noyo in a unique position of really not having to go out and actively raise money, which can take months of founders’ time.
Thanks to the work Shannon put in up front, when the time came to raise money, investors were asking Shannon if they could invest!
What Does Product/Market Fit Feel Like When You Find It?
Shannon started hearing the exact same pain points being expressed to her by many different sides of the health insurance ecosystem, and around that same time, their 3-person startup closed their first paid contract.
So, initial feelings of PMF can be the combination of:
Pain point resonance (hearing it again and again, and hearing it from different interest groups in your ecosystem).
Validating willingness to pay
If you only have #1, all you have is a clear problem to solve. If you only have #2, you risk being just a service company in the wrong market.
How To Stay Aligned as a Team While Working Remotely?
Shannon and her co-founder Dennis host all-hands virtual meetings on Mondays and Fridays. Monday’s meeting is about “what do we need to do this week to drive our North Star Metrics forward?” and Friday’s is about “how did we do this week to drive our North Star Metrics forward?”
Also, Shannon’s team has an internal Slack Channel called “high_fives”, where the team can go to give shout-outs to other team members for a job well done. It’s not a perfect substitute for in-person team celebrations, but it’s super important to find an outlet for celebrating progress towards goals & North Star Metrics.
Read more on North Star Metric’s here (pdf download from Amplitude.com)
How Do You Activate Your Investors and Advisors Using Update Emails?
Consistent monthly investor update emails are key! There’s a ton of content out there on how to write a good investor update, but Shannon mentioned one trick that’s definitely a secret weapon:
Shannon added a Shout Outs section to her monthly investor update template where she lists, by name, the investors/advisors who especially helped Noyo over the last month!
And she’s heard from a new different investors/advisors, “hey, what do I have to do to get on that Shout Outs list?! Give me a chance!”
Generally, these emails are sent bcc, so investors/advisors don’t exactly know who or how many ppl are on the distribution list (it’s typically a wider audience than just investors/advisors, it also includes potential future investors and friends), but in Noyo’s case, you know it’s at least Costanoa Ventures, Spark Capital, Core Innovation Capital, Garuda Ventures, the Webb Investment Network, Precursor Ventures and Homebrew!
And that’s definitely a room of people you want to look helpful in front of!