Adelaide startup Bluethumb is building one of Australia’s fastest growing online marketplaces for artists and collectors and it’s now raised $1 million in Series A funding to help drive the spotlight on Indigenous art.
In addition to advancing the platform’s technology and growing the team, Bluethumb co-founder and managing director Edward Hartley says the funding round, which closed in March, will support the startup’s Indigenous art centre outreach initiative.
Hartley says six Indigenous art centres use the Bluethumb platform but he’s keen to grow this number dramatically over the course of 2017.
“We want to cement ourselves as the number one destination for Indigenous art,” he tells StartupSmart.
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“We are also expanding this platform to [include] commercial galleries.”
Since launching in 2012, Bluethumb has grown to nearly 5000 registered artists. The platform is free for artists to join and they set the price for their artwork, with Bluethumb keeping a 30% commission on each sale.
Its recent round of funding was led by QUT Creative Enterprise Australia and Grand Prix Capital, with existing investors also participating, including Lux Group co-founder Adam Schwab. To date, Bluethumb has raised just over $1.5 million in funding.
“We’ve got a pretty comprehensive growth plan and it requires funding in that we need more people to be on the ground and engage key stakeholders such as Indigenous art centres,” Hartley says.
While he declined to disclose how much revenue the platform is generating, he says Bluethumb sells “hundreds and hundreds of paintings a month” and turnover from art sales grew by 50% in March.
Reflecting on the fundraising process, Hartley shares three key lessons for fellow startup founders.
1. Raising capital will take longer than you think
Hartley says securing Bluethumb’s Series A round took six months and during this period he spent 50% of his time on meetings, follow-ups and investor pitches.
“It took a lot of work,” he says.
“Everyone says its going to take longer than you think and they’re right.”
Hartley says this is why it’s incredibly useful to have co-founders because it means the business won’t suffer if one must step away to engage in activities like fundraising.
“I enjoyed the process … [but] it’s harder to really manage your business as well,” he says
2. Get your numbers down pat
When preparing for investor meetings, Hartley says founders should really pay close attention to their startup’s financial modelling and statistics.
This means understanding everything from user growth and the percentage of repeat buyers, to the cost of acquisition, where users are coming from, if growth is organic and future forecasts.
“[Investors] want to know how sticky your users are,” he says.
Hartley believes developing a knack for presenting and pitching on these points really comes down to practice.
“A lot of this comes down to [the] number of meetings so all that information becomes tip of the tongue,” he says.
“[Also], educate yourself around what a standard term sheet looks like.”
And finally, get a serious valuation of the company, says Hartley, because it can play an influential role on the outcome.
“You don’t want to go into a meeting with an unrealistic valuation,” he says.
3. Find a warm introduction
Before knocking on the door of a venture capital firm, Hartley says finding a way to get a warm lead can be far more effective.
Meeting a large number of investors and growing connections can help ensure this happens, he says, but it will also help founders meet the “perfect fit”.
Hartley has found that venture capitalists who don’t want to invest in a startup because it’s not the right market or business for them will often offer an introduction to an investor who may be a better match.
“The reception you get from a warm introduction is totally different,” he says.