FOUNDER STORIES w/ DAN BLANK of TOGGLE
“Founders learn best from other founders,” says Mark Paris, Managing Partner of Urban Us. Paris and Dan Blank, co-founder of URBAN-X Cohort 05 company Toggle, recently engaged in a wide-ranging conversation with founders of Cohort 07 about fundraising and post-accelerator life for the construction robotics company. In the spirit of candor, Blank first admits: “I’m a second-time entrepreneur. I don’t come from a background in robotics or construction.” Toggle was only a year and a half old before it joined the URBAN-X program. “We work with industrial robots and rebar for reinforced concrete — the world’s most ubiquitous building material. To build with rebar requires a lot of labor. As the world builds larger and more complex cities, we make it better, faster, cheaper, and safer.”
Global building stock is estimated to double by 2060 and so will the impact of embodied carbon emissions in buildings if technology that mitigates climate impact does not catch up to demand. Recent studies have found that buildings generate about 40% of annual greenhouse gas emissions (11% building and construction and 28% building operations), according to Global Alliance for Buildings and Construction. Startups like Toggle and Avvir aim to use construction technology to improve an industry that’s heating up fast. Funding in U.S.-based construction technology companies surged by 324 percent, to nearly $3.1 billion, in 2018 — breaking funding records, according to Crunchbase data. After leaving the accelerator, Toggle raised $3 million in seed funding from investors including Point 72 Ventures, Mark Cuban and Twenty Seven Ventures. Avirr, an URBAN-X Cohort 04 company, also closed a $2.5 million seed round in 2019.
Dan Blank, left, talks with fellow Toggle co-founder Ian Cohen, right, in their Brooklyn headquarters.
The following talk has been condensed and edited for brevity.
MARK PARIS: Most of Cohort 07 are first time founders, and everyone has preconceived notions about what they expect from URBAN-X. Tell us about your experience in the program.
DAN BLANK: We largely adhered to the process that was laid out for us. Following the [Urbantech Startup] Playbook was one of the biggest takeaways of the program. When we followed the playbook strategy things played out well and in our favor.
MP: What’s the best tactic for creating urgency for investors?
DB: Creating a narrative that this is the freight train that you better grab on to. As a founder, you have to be confident and demonstrate huge momentum. The best way to achieve this is with traction.
MP: The beauty of Demo Day is not Demo Day itself but the fact you do not have to talk to investors until after Demo Day. The freedom to avoid investors until after Demo Day allows founders to work on traction. Then you can hit the ‘go’ button to talk to investors post Demo Day with visible traction – increasing your success with investors. What kind of traction did you have?
DB: We had a pilot program running. It really helps to be able to see a working product. Yes, on paper we were generating revenue and serving customers, but with the pilot, investors got to see in person ‘wow, this is really happening’. We’re like a tier three subcontractor buried in a value chain that no one really knows about. The investors that got really excited understood the construction industry or they understood that rebar steel is massively consumed commodity material in the construction industry so it represents a big opportunity. There is a lot of momentum around construction technology and riding the wave of a hot vertical also helps a lot.
MP: Did you tailor your narrative while pitching?
DB: I really found that the more I stuck to the script, the better I did. I was actually kind of surprised by this. The script is proven. Everything else is a gamble.
MP: Were you able to tell who was serious and who wasn’t serious? How can you tell if a VC is wasting your time?
DB: I took all of the meetings. Since you know you’re only going to be doing this for a limited time (about 3 months), you just go all in and as a result you become a professional pitcher. When you’re doing it multiple times a day, you become really sharp at it. And you get better at gauging interest. Typically, if it’s not super clear that they are interested, they are not interested. Then, you move on.
MP: Does pitching east coast investors differ from pitching west coast investors?
DB: This is a generalization, but east coast investors were coming from a defensive position, looking for flaws in the business whereas west coast felt more on the offense. West coast investors were looking at our business to see if we were going to be a huge success — like how big is this going to be? They don’t want to miss a hit. There is a big emphasis on understanding what the problem or need is in the marketplace and if the opportunity is large enough.
MP: We encourage you to pitch to both styles for that reason — so you learn to respond to the negative and the positive.
DB: The best way to get better at pitching is to do it a ton.
MP: How long after you received a term sheet did due diligence take before the close?
DB: For us it took about 3 months to close. There are two phases: the blitz where you go out and pitch to everyone and then you see who’s interested and work to close one or more investors.
MP: How much did the lead investor take?
DB: They were willing to take the whole round, but we preferred to take on multiple investors. Our lead investor took a board seat, which is typical. We created additional work for ourselves in adding more investors to the round, but we are glad we did. You get a diversity of perspectives and strengths.
MP: Was Point72 (the VC that led Toggle’s seed funding round) introduced to you or did you meet them through someone you knew?
DB: We met them in the first wave of introductions during our San Francisco tour with URBAN-X.
MP: Did you get any additional connections from the lead investor?
MP: Did you have a firm closing date?
DB: We didn’t have a firm closing date. We were careful not to be too aggressive about pushing for commitments too quickly. You really need to read the temperaments of the investors you’re courting and apply just the right amount of pressure while helping them to build conviction.
Learn more about how Toggle is introducing industrial robotics and automation to critical construction methods and materials at toggle.is and learn more about our approach to helping companies reimagine city life at urban-x.com/program/.
– Jennifer Jefferson