Sweet Leaf Tea Founder talks to bootstrappers about the role of capital With the Central Texas Entrepreneur Funding Symposium only a few days away, it was appropriate that I heard Clayton Christopher, CEO of Sweet Leaf Tea speak at the Bootstrap meeting on Monday. He recently raised $18 Million in capital after being in his 10th year of business.
But it didn’t start out that way.
Christopher also spoke last year at our Austin Open4Business Conference, and the story of how he started the company is always inspiring—he talks about buying a few lobster pots for brewing, pillow cases to strain it, filling up bottles with garden hoses, buying an old refrigerated truck and fighting for shelf space with a product that was perishable after only a week or two.
Christopher makes no bones about how the good ol’ days were not the good ol’ days—and most bootstrap entrepreneurs can identify with just how difficult the constraint is (For more on the role of Constraint, see Business District June 2007 issue, article titled Constraint Creates Innovation). Christopher says he would never want to go back to those days, but he also reveals that had he taken funding from the beginning, not only would he not have known what to do with it, he would have burned through it and been done.
In fact, the value proposition for investors did not present itself for Sweet Leaf Tea until after three years of struggling in the Valley of Death. Christopher talks about how he raised $1Million in capital at that time, and where he could have raised more, he wouldn’t have known what to do with it. In fact, his bootstrapping roots continue to keep the company lean and mean, and search for opportunities that the competitors simply don’t have.
Ultimately, Christopher made the trade off to own a small piece of a much larger company rather than own a big piece of a small company. So for him, raising capital was the “right action at the right time,” especially since he attracted some venture capital that came with beverage experience—and according to Christopher, he learned more from them then he ever thought he would. Now, it’s interesting that he knows exactly what to do with the $18Million he’s raised.
Every entrepreneurial system is different, but the role of capital is not. Capital will accelerate and amplify growth but it will not solve the problems you encounter in the valley of death. Capital too early in the process can be detrimental. In Christopher’s case, they had emerged out of the VOD and were ready to grow the company in ways that they could not accomplish without capital—at least not in the accelerated time frame that they wanted.
Bijoy Goswami discusses the role of capital in the November 2007 issue of Business District in an article titled: Investor funding—much later than you think. If you or your company are seeking funding, our funding symposium will educate not only on how to go about finding investment, but what the options are out there that you may not know about, how to avoid the pitfalls of investment, working with investors, and legal issues. | 
