“Victor Ho and his co-founder Matt Doka knew there was no money in the bank.
The then-40 employees of Fivestars had to be paid, and in front of them were term sheets from investors — more than enough money to cover many months of payrolls in the future.
Yet, the funding round didn’t feel right, Ho told Business Insider.
He wanted to build a company that had social impact: a loyalty program that would help small businesses and people in the communities where they are based. Some felt like it was a great marketing ploy, but to Ho it was real.
He went with his gut and turned down the term sheets, separating himself from the investors who could’ve sat on his board and prevented him from achieving his mission. Ho and Doka pooled together their savings to make payroll and risked it all.
“We bet the entire company. That was the scary part,” Ho says. “We didn’t end up having to pay for [turning it down] though.”
Fast forward three years and Fivestars is still alive.
The make-or-break Series A round three years ago came together with new investors, and since then Ho has been building the company that met the mutual vision of him and his investors. The company now has 11 million customers visiting the more than 10,000 brick-and-mortar businesses that use FiveStar to track loyal customers.
Today, the company plans to announce a $50 million Series C, bringing its total raised to $105 million since it launched in 2011. The company declined to comment on its valuation, but it hasn’t reached the “unicorn” status of a billion-dollar company yet.”
Read the entire article by Biz Carson on Business Insider here: Smart shopping startup Fivestars turned down VC money and almost died – now it’s worth hundreds of millions