During a time when capital can be difficult to find, a Buffalo startup has managed to raise a pre-seed round higher than its initial target.
Arbol, a financial wellness platform for college students, closed late last month a $850,000 pre-seed round. That’s $100,000 more than its original goal.
“We know it’s a tough environment to get folks to part with their money,” said co-founder David Gonzalez. “The strategy was to be very patient and share with folks that we believed could be a good fit as investors.”
Participants in the round include New York Ventures, Buffalo Innovation Seed Fund, Western New York Impact Investment Fund, Launch New York and strategic angels, most with ties to higher education.
Arbol, which employs three people, gives students a holistic view of their financial situations while providing them access to campus resources and incentivizing financially healthy behavior. It also gives colleges real-time data to strategically help students.
The funding will be used to add team members and onboard new customers.
SUNY Buffalo State University, SUNY Erie, Canisius University, Villa Maria College and Keuka College are currently using the platform, and D’Youville University has signed on and will implement the platform this spring semester, according to Gonzalez.
Based on the existing customer pipeline, he expects to double Arbol’s number of customers by mid-next year.
When it comes to adding staff, that’s where Arbol’s raising strategy comes into play. The team planned for the raise to take longer than anticipated to close and managed the business and its cash burn accordingly.
But in order to grow, Arbol in early November (before the pre-seed round closed) added a sales director who had been working on a contract basis over the summer. Now that the round is complete, Arbol expects by late this year through mid-next year to add two engineers.
“Don’t be afraid to make the investments too, because you could put yourself in a spot where you’re not making the hire you need to make that’s going to take you to the next level, because you’re waiting for a check to come in,” Gonzalez said.
Having the sales director work first as a contractor helped Arbol ensure he was the right fit and made the transition smooth once he started full time.
The startup’s raising strategy also boils down to patience and communication. Founders must make sure they’re putting in the time to build up confidence and trust in potential investors.
Arbol’s leaders met with investors to tell them what they planned to do, got advice and checked back in with them once those milestones were hit. To stay in communication, the business used social media, especially Linkedin, to share real-time news.
“Everyone gets newsletters,” he said. “It’s a bit of a differentiation for us. It’s kind of a bold strategy because we were very much sharing what we do in public.”
Arbol is one of the 13 local companies that have acknowledged a private, growth-oriented round of funding this year. The list includes Azuna ($3 million), Immunaeon ($600,000), Latte ($100,000), Aerovec ($178,000), CleanFiber ($6.7 million), HELIXintel ($11 million), CaHill Tech ($250,000), FoodNerd ($1 million), LenderLogix ($500,000), SelectFI ($1.985 million), AireXpert ($3 million), Diadem Capital ($600,000) and Arbol ($850,000).
