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How EFANI Raised $1.3M From Customers Using a RUV

How EFANI Raised $1.3M From Customers Using a RUV

“The RUV was the best solution for dealing with a lot of demand.”
  • EFANI raised $1.3M from 77 different investors—many of them customers—using an RUV.
  • All 77 investors came in as a single line on EFANI's cap table.
  • AngelList oversaw accreditation checks, identity verification, signatures, and wire transfers at no charge to EFANI.
  • The investors in EFANI's RUV have helped grow the business through word of mouth marketing.

Haseeb Awan’s secure mobile service, EFANI, is all about protecting customers. When it came time for EFANI to raise its seed round, Awan was pleasantly surprised to find his customers also had his back.

“About 20% of our customers wanted to invest,” said Awan, whose company offers a cellular plan that encrypts users’ data and protects them from hackers. “It’s a testament to the power of our product.”

At the same time, Awan was all too familiar with the challenge this presented.

The Problem: It’s Expensive to Allow Strategic Angels to Invest

Awan’s a multi-time founder. When he sold his previous company, his bottom line took a hit from the legal and accounting fees he had to pay—even with just 12 angels on the cap table.

For this reason, he wanted to keep a relatively clean cap table after EFANI’s seed round, while still offering allocations to his customers. 

“This is a bit of a contradiction, because every check is another line on the cap table,” said Awan. “So there’s no way to have your cake and eat it too.”

Awan considered asking a fund manager to set up a special purpose vehicle (SPV) for his company, but realized that meant his customers would likely have to pay carry to that GP. Then, he came across a much simpler solution. 

The Solution: Keep the Cap Table Clean With a Roll Up Vehicle

A Roll Up Vehicle (RUV) allows founders to bring in up to 249 investors as a single line on their cap table. What’s more, RUVs are run by the founder, meaning investors don’t have to pay carry. For Awan, who had over 150 people interested in investing, this was the perfect fit.

“I couldn’t take all that money without an RUV,” said Awan. “The RUV was the best and really only solution for a founder like me dealing with a lot of demand.”

After providing AngelList with some basic information about his company and fundraise, Awan received a single link to share with investors. From that link, investors could review the terms of the deal and instantly wire funds into EFANI’s RUV. 

Meanwhile, AngelList oversaw accreditation checks, identity verification, signatures, and wire transfers—all at no cost to Awan. 

“It made life so much more simple,” Awan said.

In total, EFANI raised $1.3M from 77 different investors through its RUV, including Ali Moiz, founder of Stonks.com, Matthew McDonald, co-founder of Equipment Share, Joe Levy, CTO of Sophos, Cindy Bi of Capital X, and Elizabeth Yen of Hustle Fund.

The RUV comprised more than half of EFANI’s $2.5M seed round. Overall, 90% of the capital for EFANI’s fundraise came from customers. Awan said demand was so high that he had to stop accepting checks.

“The RUV allowed us to accept any check size, which was a selling point because some investors didn’t have a lot to put in,” said Awan. “Before we knew it, we were oversubscribed.”

Thanks to the RUV, Awan closed the round with only three additional names on his cap table, including the RUV.

“I only have to call a few people when I need something, but I have dozens of folks at my fingertips who are ready to help,” said Awan.

Using an RUV as a Marketing Strategy

Another key benefit of allowing small checks to invest: word of mouth marketing.

Awan said he’s been able to grow his business 200x through word of mouth. By giving loyal customers skin in the game, he believes he’ll be able to maximize exposure for his company.

“EFANI has grown entirely by referrals from existing customers. Why not incentivize them by owning part of the upside?” Awan said. “We’ve supercharged customer acquisition simply by raising through an RUV.”

When EFANI raises its next round, Awan plans to create another RUV for his customers.

“If you have customers that want to invest, an RUV is like free advertising,” Awan said. “There are multiple value propositions for founders—and it doesn’t cost a cent. It’s hard for me to see a reason not to use it.”


Disclaimer

This article and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction. Any such offers will only be made pursuant to formal offering materials containing full details regarding risks, minimum investment, fees, and expenses of such transaction. Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors. Performance of past deals or a company’s growth is not a guarantee of future returns. Illustrative examples of investors are chosen on the basis of their notability in the industry. Their inclusion above does not represent an endorsement of AngelList, and they may either approve or disapprove of AngelList or the advisory services provided by its affiliates. Quotes included in these materials related to AngelList's services and should not be construed in any way as an endorsement of AngelList's advice, analysis or other service rendered to its clients.
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