Spotlight on NJ Tech Startups: ConnectYard’s Donald Doane, Part 2
ConnectYard, based in Wayne, lets educational institutions connect their Blackboard, Desire2Learn and other learning management systems to Facebook, Twitter, video and text messaging, to better engage students and help institutions get the most out of their platforms.
The company was funded in its first two rounds by Jumpstart NJAngel Network, a private, member-led angel group that invests in early-stage technology companies in the mid-Atlantic region, with the company’s second round completed in June, 2011.
In the second part of this interview, Donald Doane, CEO and co-founder of ConnectYard, tells NJTechWeekly.com about the startup’s funding.
Tell us about your journey toward funding.
In 2010 we raised our first round of outside funding, $500,000, with Jumpstart. We first met them at an event in New York City, a conference being hosted there that had a number of angels and institutional investors. And I was pitching to them all. Something I said resonated with the folks from Jumpstart. They brought us in with other selected entrepreneurs for a meet and greet, a networking opportunity where they bring together all the various angel members. I pitched again, and again it appeared that that caught the attention of a number of the angels there. Jumpstart invited us back to do a formal presentation to the entire group. We did our timed presentation and went through a grueling Q-and-A session, which was good because it forced us to look at aspects of the company in a different way.
We had some interest from a number of the Jumpstart angels, and eventually they put together a deal team and began moving forward. We went through various terms and negotiations. By the first of July we were closed and funded. We started at the end of January, so it took us about six months.
Were there any N.J. lawyers actively involved with you at that time?
Part of what helped a great deal was that our lawyer, Victor Boyajian, of the law firm Sonnenschein Nath & Rosenthal LLP, which is now SNR Denton was a member of Jumpstart. After the networking meeting, Victor talked to his contacts there as well. It was extremely beneficial to have a law firm that was connected to that particular investment group.
So, what did you do with the money?
Once we got the initial capital, we were able to rapidly expand our sales and marketing efforts. We brought on board some sales resources, critical for us in terms of getting customers, and we put the money toward lead generation. The majority of our business comes from conference leads, and in higher ed it’s really important that you get out there and meet the people and press the flesh.
After the money came in, we were able to partner with CengageLearning Inc..(Stanford, Conn.)engage is one the world’s largest publishers, a $2 billion company, and we became the core communications system for a new platform they were launching. We met them at one of those conferences. Without that money, and the ability to be out there and visible, we would have missed out on a number of opportunities.
The money also let us reinvest in the product. We were able to make some enhancements that enabled us to shorten the sales cycle. I’m really big on process and understanding how you can make the sales process more efficient in terms of closing business. And so we would do regular reviews of our clients and profile them and see what it was about the accounts that pushed them to make buying decisions. We discovered that if we streamlined some technical pieces, we could make the decision-making process easier for the institutions. That helped significantly increase the customer count.
The funding also helped us address a sales challenge we faced. Most institutions that get new technology don’t roll it out campuswide immediately; they typically first do a pilot that runs for one or two semesters. They want to know what kind of training is needed for students and professors, and whether the staff and students will use the technology once it is rolled out. From our standpoint, we want to sell institutions a campuswide license from the beginning. We figured out a way to eliminate all those risks, so it became easier for institutions to roll out our technology campuswide.
What’s next for ConnectYard?
We just closed a follow-on round with Jumpstart at end of last month, and we will go out and raise more money sometime next year. That raise will likely be with an institutional investor, some sort of venture capital firm with whom we will partner.
You know, all angels and VCs want to know how they will get out, what your exit strategy is. However, our particular group of investors has really focused us on building a profitable, sustainable company. Their approach is, if you do that and grow it as big as you can, the right exit will come along.
We’ve really just been reaching for the stars, and we want to grow the company as big as we can. We want to be the de facto communications platform for higher education and beyond, moving into K-12 and then corporate communications.