Blinkist is a well-known companion for those who love to read but lack time. The tool that distills key ideas from non-fiction bestsellers into bite size text and audio has raised over $35 million to date. However, how they spent their first $300k of pre-seed money could have broken them.
Niklas Jansen shared his stories of ups and downs at the Reflect Festival, the GetForward flagship event, where he was interviewed by Paul Jozefak, Co-founder at Receeve. We’ve cherry-picked their refreshingly honest insights on funding and starting a business from scratch.
Paul: The company is eight years old now – have you gone through multiple funding rounds at this point?
Niklas: Yes, we raised 3-4 rounds of funding. In total, we’ve raised 35 million dollars, mostly from investors from the United States. We went through classical stages. We had a pre-seed round, seed round, another seed round because we didn’t get enough from the previous one, and then A, B, and C round.
Paul: When I was doing my research on you, I saw a comment where you said that if you could, you would skip your pre-seed round of $300k. As a former VC, I also have my opinions on raising venture capital at the wrong time. What’s your thinking behind saying – maybe it would have been better to avoid venture capital so early?
Niklas: I change my opinion on this frequently. In hindsight, it turned out well – so I wouldn’t change anything because it brought us where we are.
Why I said that back then is that I don’t think we were ready to raise money at that point. We were pretty young, we had this idea, and we raised money on a pitch deck. People trusted us, and that’s great, but we were not ready to start a company. It took us about a year to figure out how things work, and by then, we burned through a lot of money.
I think what you need to understand is that you are setting yourself up for more fundraising the moment you raise money. Because you have money, you need to invest, so you’re going to burn money, and you’re always going to run out, so you have to be prepared for the next round. Honestly, we had too much money to go slowly, but not enough money to go big, and we were stuck in the middle.
We barely made it to the seed round, and we were lucky to find someone believing in us. That’s why, in hindsight, it probably would have been better if we had just started bootstrapping, getting our shit together, and then raising money once we know what we want to build.
Paul: What are the things that went wrong because you had too much money or just because you didn’t know what to do with it?
I think the problem was that because we had so much money, we got distracted doing too many things. You look at what other companies are doing: they invest in hiring PR people, they do a lot of events… I think what matters in the end in the first years is building your product—understanding your customer, understanding your market, building a solution, and validating whether it creates value. Everything else is a distraction.
Our mistake was thinking about way too many things in the beginning. We thought our product would be way bigger than it actually needed to be. We probably lost a year just thinking about stuff that didn’t matter at all. That’s why I am saying this money didn’t really help us, because we felt we had to do a lot of things at the same time, while what ultimately mattered was just getting the product right.
That was a mistake, and I think most mistakes we made were when we thought we had to do something just because someone else was doing it or because our investors wanted us to do something. We lost focus on our customer and our vision and started collecting things that didn’t really move the needle. Every time we lost focus on what matters, we got ourselves in a bad position.
Paul: When is the ideal time to raise funds then?
Niklas: Once you have something you can scale, you have found your product-market fit, you understand your customers, and you have a product, then I would raise as much money as possible. I would put the foot on the gas pedal and go as fast as I can.
Niklas Jansen is an entrepreneur and angel investor from Berlin.
He is a co-founder of Blinkist, one of Europe’s fastest-growing mobile learning companies and one of the best workplaces in Europe. Niklas has a lifelong passion for learning, technology, and outdoor sports. Niklas is also the host of State of Mind, a podcast documentary series where he interviews world-class performers to understand how they think and act.