Shunned by Venture Capital, SafeStamp® Raised Funds on Clubhouse Instead

I interviewed founder Matt McGuire on how he broke through rejections from VCs and pitched his way to success on the social app Clubhouse.

They say resourcefulness and grit are two of the most important qualities for an entrepreneur, and no one I’ve met in recent years has embodied that better than Matt McGuire, founder of SafeStamp®.

Perhaps it’s his military training. Perhaps it’s his quietly confident nature. Whatever the reason may be, McGuire’s story of how he overcame his obstacles is something everyone can learn from.

You can’t fake it

McGuire is an American and a former analyst for elite military special operations. While deployed in Iraq, he noticed the amount of fake drugs circulating within the local economy.

This leads to a loss of about US$150–200 billion a year for pharmaceutical companies. More importantly, it also leads to over a million deaths annually.

So McGuire decided to crack the problem and set up SafeStamp® in 2014. Today it has a patent pending solution using nanotechnology to produce a small authenticity indicator that glows when the user touches it on the product packaging.

His team has the textbook mix of both business and science talents— Wharton MBA, former Mckinsey consultant, nanotech PhD and former pharma execs. The startup has won many competitions and awards across the U.S., but yet McGuire struggled to secure VC funding.

Too early

The main issue, according to McGuire, is the fact that his company is ‘pre-revenue’. The VCs that have listened to his pitch mostly liked what they heard but told him it was “too early”.

“A lot of VCs are behaving more like banks than venture funds. They want to invest at a point where there is revenue. But by then you could just get a bank loan instead,” McGuire said.

He felt that this is why a lot more software-as-a-service (SaaS) companies get funded instead of deep tech startups. Apps and platforms have a much shorter gestation period and are easier to turn around in VC portfolios.

One VC in particular told him after his pitch, “I only invest in bits, not atoms.”

I’ll take your whole round

McGuire didn’t set out to pitch in Clubhouse initially. He simply noticed that there was “a real community” gathering within the app and he went in to share casually about what he was doing.

He started receiving emails and messages and raised US$150,000 in a single day.

He begun to pitch more actively in Clubhouse chat rooms and after one particular event, his interns noticed that his story was starting to trend on Twitter and WhatsApp messages were flooding in.

An investor even tweeted, “I’ll take your whole round.”

As at the date of publication, SafeStamp® had already received US$700,000 in investment commitments.

Tell your story

McGuire has the following advice for other founders looking to raise funds on Clubhouse.

  • Share your story to the community at large and not just in pitch rooms.

  • Don’t just focus on the moderators. Sometimes the real investors are lurking among the audience.

  • Be succinct in your pitch; take criticism and don’t be too defensive.

Lastly, he also noted that many of the moderators in pitch rooms are not the typical tech VC types. They may want revenue share arrangements instead of the normal equity or convertible note deals. Founders should be clear on the terms being offered and the implications for their startups.

It was also on Clubhouse that I met McGuire and decided to write an article about him and SafeStamp®. He popped into my little room to share his story when there were only four people in it.

The online world can be chaotic and precarious. But I guess McGuire is proof that when one is sincere and persistent enough, the stars can line up when you least expect it.