Entrepreneurs who don’t have limitless investor funding, or personal wealth, often have to go to extremes to keep a new venture afloat: Depleting their savings, forgoing a salary, even selling off assets.
So it’s no surprise that Katlin Smith had to make sacrifices to come up with seed money when she started a natural foods brand Simple Mills out of her Atlanta kitchen in 2012.
“I definitely had to do some very creative things on my own side to fund the business, [like] selling my car and maxing out credit cards and crazy things like that,” Smith recently said on an episode of the “How I Built This” podcast.
Smith struggled to bootstrap the fledgling business for nearly two years until she landed over $2 million in seed funding from institutional investors in 2014. Over that time, Smith poured her life-savings into the business while “talking to anyone and everyone” to drum up interest from potential investors.
“I think resilience is probably one of the largest things you’ve got to have to get funded,” Smith said.
Smith, now 36 and based in Chicago, grew Simple Mills into one of the biggest natural snacks brands in the U.S., selling crackers, cookies and baking mixes made with seed and nut flours in over 30,000 locations across the country.
Packaged foods giant Flower Foods just bought Simple Mills for $795 million, the companies announced in January.
‘Your mentality is to keep going no matter what’
When she started Simple Mills, Smith worked as a consultant for Deloitte. She dreamed of running her own business focused on foods that offered healthier, less-processed alternatives to the items usually found on grocery store shelves at that time, she told Forbes in 2018.
She started out baking muffins in her own kitchen before renting “the cheapest commercial kitchen possible” an hour drive outside of Atlanta, she said.
Within that first year, she’d already convinced the local Whole Foods to carry Simple Mills products and hers was the “best-selling muffin mix on Amazon,” Smith told Forbes. But, scaling a new business is expensive and Smith realized she’d need to raise outside funding if she wanted to keep growing, hire employees and move to an office that wasn’t her bedroom.
Smith plowed through $70,000 of her own savings and still needed more money, so she sold her car and got help from her parents, who “had to reverse mortgage their house to help the business continue,” she told Forbes.
Simple Mills’ success took a lot of luck, especially since Smith’s lack of experience meant she “didn’t anticipate how much money it was going to take,” she said in 2018.
“In retrospect, I can look back and see a million places where things just could have gone wrong. Honestly, we got lucky,” she told Forbes. At the same time, though, “it seems the harder I work, the luckier I get,” she added.
Even in those moments, when it seemed like Simple Mills might not have enough money to keep going, Smith said her resilience kept her from thinking the business would actually fail.
“Your mentality is to keep going no matter what,” she told Forbes.
Billionaire LinkedIn co-founder Reid Hoffman agrees, as do authors Catalina Daniels and James Sherman, who interviewed 18 founders of notable companies — such as Blue Apron, Gilt Groupe and Rent the Runway — for the book “Smart Startups: What Every Entrepreneur Needs to Know.” Each of those founders told Daniels and Sherman that being able to bounce back was crucial, the authors
“Having resilience is absolutely essential [for] the emotional makeup of a person in terms of becoming an entrepreneur,” Sherman said. “If they don’t have that type of resilience, they need to learn how to build it up.”