This Entrepreneur Raised $176 Million To Help You Cross The Atlantic In 90 Minutes
AJ Piplica has raised some serious money for his startup that could be a part of a new era of transportation and social interaction. To be precise $20 million in equity and the rest in debt.
On the Dealmakers Show AJ Piplica shared what the hardest part of building a technology company really is. Plus, raising funding during tough times, and when you are almost running out of money. As well as the tremendous growth his company is enjoying as they continue to hire, while others are making layoffs.
AJ Piplica was born in New York before his parents moved to work on a startup in Tampa, Florida when he was six years old.
After high school he moved up to Georgia Tech for college. His focus was aerospace engineering, and especially where the future of people and technology came together with it.
Stints at the NASA space center in Houston working on shuttle wings and lunar landers got him hooked on aerodynamics and hypersonic technology.
While working on his Masters degree AJ started working at Spaceworks in Atlanta. There he began working on reusable launch vehicle programs and hypersonic aircraft development programs.
There he had the opportunity to go beyond just engineering, and step into the business side of things. They put him in charge of running Generation Orbit, a subsidiary company.
He built out the company, really taking on the role of a startup founder, without taking on the full risk of doing it alone. He got to learn about management, hiring, building a team, selling, and more. It was here that he also met his future cofounders.
Together AJ and his cofounders were confident that they could champion any technological problem, but to make something work as a company, and to raise the capital that would be needed to make that happen, he says that meant “solving really important problems for customers.”
They had been watching everything coming together in the space when they decided to found Hermeus. The technology components were all there individually. It wasn’t an engineering or science challenge that they were really facing, it was as much a business and financing challenge.
Their mission is to make hypersonic passenger travel normal. High speed, long distance travel.
Fortunately, in addition to the technology, the defense market and private capital market to bring it all together were all working in their favor.
Today, Hermeus is working on an aircraft that can carry 20 passengers across the Atlantic at Mach 5 in just 90 minutes. In stark contrast to the seven to 10 hours it takes today.
AJ says that has been 60 or 70 years since we’ve really seen a leap in transportation that changes economies and society. He sees this next leap being as impactful as when the Romans built their network of roads, and when steam power came along.
Of course, to get there you have to be focused on not only solving relevant problems that will allow your company to get there, but also being sure you are cognizant of working on the right challenges facing your business.
When it came to capitalizing the business Hermeus has raised from individual investors, small firms, and some of the biggest and best known VC firms.
Of course, fundraising is never easy. In one round they were told no by 69 investors. He says that you just have to build some thick skin, but remember that you only need to land that one yes.
At every pitch and meeting he advises to extract as much feedback and value as you can, and to be introspective about what you hear, and iterate based on that.
One of the big challenges in fundraising he points out is perceived risk by investors. That was perhaps far harder in this case, as they were raising for a hardware company that would need to raise multiple rounds of capital before they ever expected to launch a full product.
AJ says that investors assess three main categories of risk when investing in startups:
They may be comfortable betting on a startup which carries one of those risks. If you are weak in all three, you are going to have an extra hard time raising capital.
Hermeus tackled this by working to reduce risks at each round. They would use the capital from one round to really derisk one of these areas before going back to raise more.
This could be done by proving your technology. Proving your customer base, and by hiring the best possible team in the business.
Still, this isn’t always bullet proof. There are many wild card factors. Like COVID.
Hermeus was raising their Seed round when COVID hit. The term sheet they were negotiating got yanked. Fortunately, they pulled together another investor. Yet, it was literally the day before their mortgage payments were due that the money hit the bank. It was also the last day that they had promised their families that their would give this venture a shot if they hadn’t really made it work.
Startup fundraising · Scaling company culture · AJ Piplica’s top advice before launching a business
