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A Case Study in Equity Crowdfunding: Cary Breese, CEO of NowRx (Part 5)

Posted on Friday, Feb 12th 2021

Sramana Mitra: Let’s talk about your financing strategy. How have you financed this venture? 

Cary Breese: We’ve been a little unique. To start, we raised a seed round of funding from family, friends, and advisors. We ended up raising $3 million that way over two years. From just a family and friends network, my co-founder and I raised $3 million in $25,000 increments. It took us to where we had substantial revenue and customer base.

We then decided that it was time to raise a proper round of funding – a Series A. We went through the normal process of talking to VCs in and around Silicon Valley. At that time, there was not a lot of appetite for pharmacy startups. There were several competitors with different attempts on pharmacy, but not all of them were direct competitors.

We go to VCs and they say, “You are the seventh pharmacy startup to come and talk to me this week.” There was difficulty raising a Series A from a venture capitalist. We then got interested in crowdfunding. Something new called regulation A crowdfunding came around 2017 and 2018. I describe it as crowdfunding heavy. It’s quite interesting. I saw some companies raise money from $7 million to $20 million in crowdfunding. That is much different from what you see in Kickstarter.

I started to research Regulation A. It allows startup entrepreneurs to raise money by selling their stocks to unaccredited investors. You have to go through an FCC qualification process which I felt comfortable with. After watching a couple of companies get success, we decided to try it.

We used a company called seedinvest.com to launch our series A crowdfunding round in 2018. We raised $7 million through crowdfunding. 

Sramana Mitra: Let’s double click down on that. When you set up an equity crowdfunding round on a platform, you almost have to bring the first set of investors from your network, and then the platform’s network kicks in gear. Could you talk about your experience and the mechanics that you used to have a successful crowdfunding round? 

Cary Breese: That’s a good recommendation to start a crowdfunding round – getting it started with existing investors. We did that to a certain degree. Some of our investors were happy to invest again in series A. We worked hard to bring new investors to our round as well.

I have another approach that I recommend. You can go out and advertise for potential investors. You can use Google AdWords. You can try to get people interested in your company and bring them to a landing page.

It’s like you have a different product that you are selling in addition to your normal product. You are selling your stock in the company as a product. We approached it as a marketing effort. 

Sramana Mitra: What you are talking about is extremely interesting. How many of your physician partners have invested in the company in this crowdfunding round?

Cary Breese: We’d love to have a lot of people that are using our product to also invest. We were a small company when we were doing our Series A. We didn’t have a huge online presence. We are also a local business because we do deliveries. We didn’t have an extensive user network that would invest in the company.

Most physicians weren’t interested in investing at that time. It sounds like a good idea, but that didn’t pan out for us. We did much better in our crowdfunding round by going out and advertising for investors. 

Sramana Mitra: It was randomly picked investors that you advertised on Google AdWords and recruited to your crowdfunding campaign. 

Cary Breese: That’s right. 

This segment is part 5 in the series : A Case Study in Equity Crowdfunding: Cary Breese, CEO of NowRx
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