✨ Pre-order your Nailbot in Drop 2 by July 15th ✨

How We Raised $5M for a Hardware Startup

How We Raised $5M for a Hardware Startup

Earlier this year, we announced our fundraise. Thank you for the overwhelmingly positive response. I thought I’d follow up with more on Preemadonna and our plans for the Nailbot.

Our $5.6M overall seed funding was led by Halogen Ventures alongside Version One Ventures, the Amazon Alexa Fund, Two Small Fish, Garage Capital, SOSV, Shrug Capital, Telescopic Ventures, Catapult VC, Cleo Capital; and a host of incredible entrepreneurs including Tara Bosch - the founder of SmartSweets, Markus Frind - the founder of Plenty of Fish, Helen Greiner - co-founder of iRobot, Charles Huang - co-founder of Guitar Hero, the Spanx by Sara Blakely Fund, a Donor-Advised Fund at Rockefeller Philanthropy Advisors and more angel investors.

It has been an unpredictable and rewarding journey, and as we gear up to launch Nailbot, I want to take the opportunity to share my lessons learned by fundraising for a hardware startup.

Powering Creativity in Beauty

For context, Preemadonna's flagship product is Nailbot, a connected, at-home manicure device that instantly prints art on your nails with our specialized polish and primers. You connect your smartphone to Nailbot via our mobile app, select any photo, emoji, or design, and then Nailbot will print art on your nail in one pass. It is a very quick process that only takes 5 seconds! We are building a full product category of Nailbots that seamlessly decorate nails with art and polish.

Our mission at Preemadonna is to power creative expression in beauty! We have a company motto that we “make magic happen,” and we incorporate that playful experience in our products. We do this in three main ways:

1) We build affordable and accessible at-home smart hardware (Nailbot) that decorates fingernails. The hardware is accompanied by a mobile art marketplace that complements the Nailbot printing experience where users can create, share, and eventually sell their designs!

2) Our community is primarily composed of Gen Z young women who are the heaviest users of DIY nail cosmetics. Nailbot is not only a beauty tool but also a gateway for STEAM engagement as our community designs digital art and learns how Nailbot was made. We have a unique and privileged opportunity to engage and co-create with these dynamic cultural agents who are makers, artists, hackers, and coders.

3) We picked “nail” as our first creativity category because it is playful, artistic, and social. Our product and platform vision to build and power interactive creative printers and robots that extend beyond the $15B nail industry to other maker markets like henna, tattoo, and craft. 

Our Journey

Folks are congratulating us on raising the round and we are incredibly humbled and appreciative. The truth is that our funding story is common amongst many hardware founders that raise seed capital, made all the more challenging being female and a person of color. 

We raised capital over several years to build Nailbot. Each check was hard-fought and generally required rounds of diligence. 

Here are five things that we did to build and capitalize a consumer beauty hardware product.

1) Adapt 

We didn’t raise one “big” VC round. Many traditional venture capitalists on Sandhill found it difficult to understand a vision for a consumer beauty hardware product in part because they are typically focused on software. Despite some investors' positive feedback that their wives or daughters would-be customers, many couldn’t build conviction to invest because they were worried about capital efficiency or our ability to execute such a big bold vision. So, we adapted. We started to change our style of pitching: showing what we’ve been able to accomplish with little capital and the organic communities we are building around Nailbot. If you can’t convince someone to give you the $5M at once, should you give up? Or should you find an alternate way? We found an alternate way. 

2) Raise in Tranches for Product Progress

With each capital infusion, we've made steady progress on our hardware and software development through each stage of NPI. We’ve maintained a lean team and each tranche of capital went to specific builds (i.e., our EVT builds known as MVP, POC1, POC2, Alpha 1.0, Alpha 1.5, Beta 1.0, Beta 1.5). While we built our bare bones Nailbot MVP with virtually no outside capital and tested and iterated on each build on users, the reality is that subsequent hardware development is capital intensive and is unlikely to be funded solely with preorders or crowdfunding. So, if you do not have the full amount to plan the full NPI process with, then raise and build for a specific milestone. 

3) Find & Mobilize a Village

I started my professional career after college in politics as a fundraiser and political organizer. I learned that it takes both a grassroots approach coupled with larger institutional funding to get a campaign funded and a candidate elected. As a founder, I took a similar approach to our capital raises. Our path has been paved with checks from accelerators, pre-seed, and seed funds, over 60 individual investors, and from the power of the crowd.  

In the early days, we participated in accelerators that shaped who we are today. We lived in Shenzhen China as part of SOSV’s HAX Hardware Accelerator and that chapter in our company continues to pay off as we work through manufacturing, tooling, and supply chain logistics. We were part of the Founders Factory accelerator which introduced us to new investors and beauty conglomerates. During this time, we also initiated early product and equity crowdfunding campaigns with our MVP Prototypes to engage our audience and find our first 1,000 paying customers. We are excited to continue shipping our pilot production Nailbots to our backers and engaging them as we grow the business. 

We pitched hundreds of angel and smaller seed funds - many of them multiple times before they said yes. While building a large investor base takes up precious time, it has network effect advantages. For example, we have built a strong network of angels that we can turn to for manufacturing, supply chain, or customer acquisition questions. Also, since many of our angel investors are self-made entrepreneurs that have built their businesses and billion-dollar consumer product categories from the ground up (often without any outside capital), pushing Preemadonna to be capital efficient and creative while funding inventory and product development. 

Ultimately, we found investors that believed in us, the immediate problem we were solving, and our bigger vision - these key investors also happened to be predominately female. Incredible women have powered Preemadonna over and over again - from Jesse Draper (Halogen Ventures), Angela Tran (Version One), and the numerous female angels and preseed/seed funds led by women that believed the Nailbot would be a truly transformative product.

Pree Walia (CEO) & Jesse Draper (Board Member) with Nailbot!

4) Consider Unconventional Pitches   

We entered numerous pitches – to win cash, meet others in our industry and engage with potential partners or investors. I’m listing a few out for other entrepreneurs who think their participation in pitch events may not add up to much. It did for us!  

  • Meet the Drapers, Finalist. Our appearance on Meet the Drapers reconnected us with Halogen Ventures led by Jesse Draper and a separate investment from Tim Draper’s Draper Associates Investments, LLC.
  • MIT Solve Challenge. While we didn’t win the challenge, one of the Judges from Upstart Co-Lab and Rockefeller Philanthropy Advisors loved our application. We were able to secure additional angel investment through her introductions.

5) Believe in Yourself 

I’ve overcome “imposter syndrome” many times on this journey. I’ve had to dig deep to focus on our purpose and mission even through all the no’s, failures and a draining bank account. My advice to other entrepreneurs that are starting out is to believe in yourself. Your mental mindset is one of the biggest competitive advantages that you have as an entrepreneur. Rejection from investors can feel debilitating – I know it having pitched over a thousand investors! Conveying delays in your product timeline to both your investors and crowdfunding backers also takes a toll on your self-confidence. Focus on the positive, learn from your mistakes and keep going. There is always a bright side. For example, we secured funding from patient investors which gave us room to experiment with market positioning and incorporate customer feedback into Nailbot’s product experience.

What’s Next? The Market is Primed for Nailbot.

It has been an incredible journey bringing Nailbot to life and we are at an inflection point. COVID-19 has brought distinct manufacturing and operational challenges, but also accelerated the demand for at-home experiences especially relating to DIY nail and beauty. In fact, in the last 52 weeks of 2020, the nail category had an 18% sales spike which is expected to continue into 2022. Nail topped the mass market beauty categories for overall percentage growth last year.

Timing is right for our at-home Nailbot beauty and creativity experiences, and we are excited to be months away from our e-commerce launch!

If you are passionate about our mission and want to collaborate, ping us at pree@preemadonna.com. If you’d like to reserve your early Nailbot, sign up at www.preemadonna.com. Follow us on Instagram at @preemadonna for the latest. 

Thanks for reading and Go Nailbot:)

Pree Walia

Pree Walia is the founder and CEO of Preemadonna. Preemadonna is a Silicon Valley-based technology start-up building interactive hardware & software experiences and powering creative platforms with an initial focus on Gen Z.

Pree previously worked at high-growth venture-backed start-ups focused on connected devices and building automation services. Pree started her professional career working on progressive political campaigns as a political fundraiser and community organizer. She holds an MBA from the University of Chicago and a BA from Northwestern University. She is passionate about causes that impact women and girls. Pree serves on the Board of Advisors for MakerGirl, a nonprofit that inspires girls to pursue STEM fields. Pree was named one of the top 25 Women in Robotics to know by Robohub.  

#GenZ #Funding #Hardware #BeautyTech #NailArt #Manicure #Nailbot #NailPrinter #NailRobot #Creativity #Automation #Entrepreneurship #GoNailbot

paint-drop