As a Web developer, Brian Razzaque recognized the power and efficiency of social media marketing and wanted to make social media marketing easier for companies but wasnt sure exactly how to achieve his goal. Then an employee asked to be notified every time Razzaque made a post to the company blog so that he could then share the post with his social net- work. Razzaque realized that every company has super fans, customers with a strong affinity for a company and its brand, who will readily share content about the company if it is easy and convenient to do so. That realization was the beginning of Razzaques company, Baltimore-based SocialToaster, a platform that sends simple e-mails notifying super fans of new content, such as blog posts, articles, events, promotions, and awards, that fans can, in turn, share with members of their own social networks with just one click. SocialToaster magnifies a companys social media efforts many times over, drives traffic to its Web site, enhances customer engagement, and improves brand recognition and loyalty at minimal cost. In essence, SocialToaster allows a companys super fans to increase exponentially the visibility of the content that the company creates through the fans social networks. Razzaque says promoting a business through a companys super fans using SocialToaster is as easy as making toast.

Razzaque began promoting SocialToasters power and began landing clients around Baltimore. As success stories began to spread, SocialToaster landed bigger clients, includ- ing the Baltimore Ravens, the Baltimore Symphony Orches- tra, the Detroit Lions, Lifetime Network, A&E, VH1, Sony Pictures, Universal Music, Johns Hopkins University, and many others. Clients report that their fans share 60 to 74 per- cent of the content they promote, providing exposure that is almost impossible for companies to achieve through their own social media accounts alone. In its first year of opera- tions, SocialToaster generated $300,000 in sales, an amount that more than doubled to $800,000 in its second year.

Razzaque is at an important crossroads in the life of his company. He needs financing to fuel its rapid growth, but he wants to ensure that he selects the right sources of financing. He estimates that he will need $500,000 as bridge financ- ing to fuel the companys short-term growth. That financing will give him time to raise the $2 million he will need to increase the size of SocialToasters sales force, hire account managers, increase the companys marketing efforts across the globe to land more clients, and hire more technical staff

to constantly upgrade and improve the product and enhance its features.

Razzaque has called on several wealthy individuals in New York City, Boston, and Silicon Valley. None were will- ing to invest in SocialToaster, but they did offer Razzaque helpful feedback that enabled him to improve his pitch. He also discovered the differences in how potential investors in Silicon Valley and on the East Coast view start-up com- panies. Razzaque says investors in Silicon Valley were not impressed by SocialToasters existing (but modest) revenue stream. Instead, they were looking at the companys growth rate as an indicator of market potential. Does the company have the potential to become a billion-dollar business? East Coast investors, however, were more interested in the com- panys fundamentals, its revenue stream as proof that the product is viable, its burn rate (how quickly the companys monthly expenditures were burning through its capital), the soundness of its business model, and its staying power.

question :

What advice can you offer Razzaque about avoid- ing potential dangers and pitfalls in accepting outside financing for a business. ?