In this episode of Startup Success, we sit down with Jaclyn Johnson, founder of Create & Cultivate and co-founder of the angel investing platform Cherub, for a conversation about scaling a business, navigating an exit, and the future of early-stage investing.
Jaclyn shares how she built Create & Cultivate into a multi-million-dollar, bootstrapped company, why she made the difficult decision to sell, and what prompted her to buy back the company a few years later. She offers an honest look at the tradeoffs of private equity and the factors that can make or break a deal.
Between the exit and the buyback, her work as an angel investor and mentor to early-stage founders led her to co-found Cherub, a platform that connects founders with angel investors they’d never reach otherwise.
We discuss:
- The realities of selling to private equity, and what founders often overlook
- What founders need in place before they start raising capital
- How the fundraising landscape for early-stage founders is changing
If you’re building your first company, preparing to raise capital, or thinking about an exit, this episode offers hard-earned lessons from a founder who has been on both sides of the table.
Brenda Hernández Jaimes: Podcast Producer & Talent Coordinator, Ellas Media
Angela R. Chong: Audio Editor & Post-Production Producer, Amplify Podcasts
Intro 00:01
Welcome to Startup Success, the podcast for startup founders and investors. Here you’ll find stories of success from others in the trenches as they work to scale some of the fastest growing startups in the world. Stories that will help you in your own journey. Startup Success starts now.
Kate 00:18
Welcome to Startup Success. In this episode, I sit down with Jaclyn Johnson, founder of Create & Cultivate and co-founder of Cherub, to talk about what it really looks like to build exit and then, in this situation, rebuild a company. From selling Create & Cultivate for 22 million to PE to buying it back just a few years later, Jacqueline shares the lessons founders need to know about private equity ownership and control. We then dive into how they’re rethinking early stage Angel fundraising with Cherub. What’s changing in today’s startup landscape and what it takes to really stand out with Angel investors in an AI driven world. Welcome Jaclyn. So Jaclyn, we have so much to cover, but I want to start with Create & Cultivate and kind of your background and what led to the founding.
Jaclyn Johnson 01:19
So a long time ago now, but I had actually started a different company. It was called No Subject. It was a marketing events influencer (before influencers were called influencer) agency. And really was working with different clients, ranging from beauty, fashion, tech. I was a first time founder. I was in my early, early 20s, making a lot of mistakes like founders do. And really there was nothing at that time, and this is like 2010 timing, that like looked, felt, or spoke to me as a young millennial female founder. There weren’t that many resources. There definitely wasn’t events. And so I created something called Create & Cultivate as a side project through the agency to get women together, get offline, do a little retreat, workshops, speakers dinners. And it really started like a small 25 type person thing, and then year over year, it kept growing. Brands were getting more interested. People were excited. It was 50 people, and then 100 people, and then cut to 2016 I actually sold that agency, and then went full time, basically trying to build Create & Cultivate into something even bigger and better.
Kate 02:22
Awesome. And what caught our attention that’s so unique is you ended up selling it right to PE?
Jaclyn Johnson 02:29
Yeah, yeah. So Create & Cultivate was completely bootstrapped. We raised no outside capital. We had really, really insane growth, really, I, you know, it’s, I would say, like the founding started in 2015 which is when we were like, Okay, let’s take this seriously as a business. And then really, up until 2019 we were doing 14 million in revenue, 4 million EBITDA, just really crushing year over year. 2020 we were on track to do 25 million in revenue. And obviously we know what happened – Covid hit. But we ended up doing quite well during Covid and pivoting into more of, like a digital footprint. And we ended up selling to PE top of 2021.
Kate 03:03
Was that hard to come to that conclusion, because I know for a lot of founders listening like it’s your baby, right? You’ve been there through the whole rise, and to just kind of take that step is a big deal.
Jaclyn Johnson 03:17
Yeah, it was interesting. We had, like, an interesting kind of up and down with selling the business. So we had really early interest in 2018 so at that point, we’re like, three’ish years in, we’re 8 to 10 people I think, we’re doing probably, like 8 million to 10 million in revenue, but like, growing really fast and, like, had a lot of inbound interest. So we actually went through a process in 2018 which really was like a great thing for the business to do, because it got us very organized.We were able to tell our story in a really compelling way. We got a bunch of LOIs. We ended up going with a public company. You know, obviously the diligence around that was really intense, and then it ended up not working out and falling through, which was devastating. But at the time, it was like, Okay, we were still, like, fresh and young enough that it was easy for us to bounce back. A lot of the reason that one fell apart was because of the lack of C suite around me. So really at the time, being such a small company, you know, I was the CEO, but I was also the head of marketing, the head of sales, whatever, and also the face of the brand. And I think they got a little spooked that I was too much of the business. Essentially in 2019, brought in more high level people, including a COO/CFO, who was amazing and really helped structure the business and professionalize a lot of the details. So our goal always was to go back out 2020 for sale. So 2019 was a great year for us. Top of 2020 we were back into a process. Had a bunch of LOIs around, like March 1, and it’s been a devastating kind of roller coaster as it is, I feel like on any process. And then obviously all of those pulled out because Covid. Which from there, I kind of had mixed feelings about selling the company. I was like, I don’t want to do this again. Like, this feels like a nightmare. We’re doing well, we don’t need this. Obviously, Covid, though, put a total ring in it, where I was like, Okay, is the world ending? Are we gonna ever do events again? Like, it became a little bit of a different conversation. We luckily had launched a digital membership the year before, built the infrastructure, built the back end, so when the world shut down, we pivoted very quickly into digital memberships, and were able to scale that business really quickly to 10,000 members. (Wow. Congrats.) Thank you. Which is highly profitable. So when we got to the end of the year, we actually had a really good story. While our revenue wasn’t doubled what we thought it was going to be, you know, our EBITDA was the same. We were able to maintain revenue, a semblance of revenue from the year before. But the only people who were really interested in deals at that point was private equity. A lot of the strategics that were interested were not doing great, or had shut down, or were trying to fix their own situation. And so private equity came to the table, and I will say, at the time, it felt like a really good deal for a few different reasons. One was, you know, they hit my number that I wanted to kind of walk away with. And two was, I was super burned out and, like, ready to walk away. I just mostly was like, I feel like, obviously going through the twice of the acquisitions, like not working out and then Covid. And they were okay with that. They were like, Yeah, we’re okay with you stepping away as long as we can get another CEO that you like, train and bring in, which I was happy to do. And so it felt like the right move at the time.
Kate 06:27
Got it. So you stepped away and then explain to us how you then re-engaged, and that whole process, because that’s very unique.
Jaclyn Johnson 06:39
It is very unique. It was very unexpected. It was definitely not on my bingo card, but I essentially stayed on as a board member and was involved in some of the events. But, like, lightweight, not day to day. I’d actually started Cherub, my other company, so often off doing other things. Around two years in the PE firm came to me and basically was saying they were interested in going a different direction and potentially selling the company again, which was, like, much faster than we had thought. And really, I was kind of surprised. I wasn’t expecting it. They wanted me to come back as CEO, but I was like, I don’t know any of the team now. Like, it’s a completely new team, pretty much. The direction they had gone in was different than what I would have done. Also they were not going to pay me what I wanted to make. It was, like, a whole thing where I was like, Okay, this doesn’t sound interesting to me. But essentially the alternative was, like, we might go out and sell it to someone else for parts. And I didn’t want that to happen either. So it was kind of this catch 22. I had started a separate business with my partner, Marina Middleton, who was awesome, young operator, really smart. And we had built something called the Blueprint Mastermind, which was a small business, but it was me, her, Ellie Webb. We had started it together. It was like a mastermind to coach women, and it had done really, really well. Year one, it’d done a million dollars. Marina was operating the business. And so I brought it to her as like a conundrum of what would you do? What do you think? And, she was like, Well, what if we bought it? And I hadn’t even really thought about it as an option. I was like, well, it feels complicated. I don’t know. This is a beast of a business to run. I know I don’t want to run it. She was like, I would be the CEO. Happy to come in and, like, do this, and like, Let’s build this thing. And so I had to go back and basically start these negotiations of like, Hey, we’re interested. Obviously they had other buyers interested. I had to, like, recuse myself from a lot of it, because I was on the board. I was on both sides. And so Marina had to negotiate a lot of it as well. But net-net we ended up buying back the business and relaunching. It took time to reorganize and then relaunched it in 2024.
Kate 08:38
That is a wild story. Good for you guys. (Very crazy.) Yeah. And now, a year or so in, are you happy you did that?
Jaclyn Johnson 08:48
Yeah, no, it’s amazing. I mean, honestly, for a bunch of reasons. One was I would have been devastated if it had gone away. A lot of the community I don’t think fully understood that I had sold it, or like that I wasn’t a part of it. And so being able to tell the story of coming back and obviously having re-energized the business. For us, it’s been really amazing, because for one we are running it completely differently than how I ran it. We are venture-backed. We did raise venture capital for the business. So we raised $2.6 million, and so for us, we’re treating it a little differently. And on top of that, like, we’ve really been like, you know, able to tell our story and build the business in a way that we want to, which has been really exciting. And so it’s nice when people are like, you’re back and like we’re so excited. So it’s been good.
Kate 9:35
That’s good. That tells you something, right there. So then tell us, in the midst of all of this, you have a new venture, which I think will be of a lot of interest to our audience. So tell us about that.
Jaclyn Johnson 9:46
In the year I took off, it was interesting. I did a lot of mentoring and a lot of coaching and things like that, as mentioned. And I felt like the number one thing asked across the board was, where do I find angel investors? How do I raise money? I think this is just like a constant conversation for especially early stage founders. And I didn’t really have a good answer. I was like, here’s how you raise money. They’d be like, okay, cool, I need to raise, like, $200,000 it’s like, perfect. Like, you’re not ready for venture, you need angel investors. Then they’d be like, great, where are the angel investors? And I was like, Ah, you can go on LinkedIn and like, search, and there was no really good place to find it, especially for like, a lot of these early stage brands. I ended up going on a hike in Los Angeles with my now co-founder, Angeline, who’s a product engineering person. She had an exit through one of her companies. She’s awesome. And she was like, I want to start angel investing. Like, where do you get deals? And I was like, honestly, people kind of DM me. I get random emails. I started a small email list of people I forward deals to. I can add you to it. She was like, Cool. And then we left, and she called me, I feel like there has to be a way to solve this. Like, this just feels like a really completely, like, discombobulated experience on both sides. For angel investors, it’s like half your deals are in Dropbox, half are in your Google Drive. Like, what did I invest at, I don’t even remember. And then the other thing is, you’re getting solicited for deals you’re not even interested in, on topics you don’t even invest in. And then for founders, it’s like you’re trying so hard to get in front of these investors. But the reality is, like, 90% of fundraising is network, and 10% is like, right time, right place. And so if you don’t have the network, you can’t get in the door. And then also you can’t be in New York City every weekend trying to network with people, if you’re a founder that lives in, you know, Illinois. It’s just challenging. So essentially, the vision is the social graph for investing. And what that means is, it is the founders and like, the home base for founders, it’s the home base for investors, and the content and the connection is around deals. So for instance, as a founder, you join, you get a beautiful Squarespace style data room. It’s a very consumerified experience, unlike anything that’s out there. (11:50) We basically pulled 100 investors to find out what are the top stats you want to know? What are the things that are going to draw you in immediately? We built our pages around that. Put in all the information around your raise, what you’re looking for, and then, like, what you want out of an investor? Do you want more women on your cap table? Do you want people who write $50,000 checks? Do you want exited founders? You’re able to input that information. On the same side, investors create profiles. They talk about what they’re interested in, their portfolio, what they look for, how they operate as an investor, their check size, all that good stuff. And then what they’re looking for in companies. So CPG, tech, AI, whatever it might be. And then we match you based on percentage or fit score. So this is a good fit for you. It’s like an 82% fit, then the founder can say they’re interested, the investor can say they’re interested. It’s a double opt in situation, so the intro is already warm. And then from there, you can do a deal.(12:39)
Kate 12:39
Oh, that’s great. I mean, it’s, yeah, it’s amazing first of all, that there wasn’t something like that. But then too, you both were absolutely right. Like, there’s such a need at the angel stage of people to find each other, especially with everything being dispersed now, it’s not as easy to network, you know, with these companies all over.
Jaclyn Johnson 13:03
It’s so hard, yeah, and(13:04) there’s such good companies everywhere. You can’t just be beholden to what’s in your geography or what’s in your circle, or what’s in your socio economic, who you know or what you’ve done, or where you went to school, or whatever it might be. And so, it’s been awesome because since we’ve launched the product seven or six months ago, $7 million has been deployed to brands through share of introductions. So we’re super excited for a few different reasons. One is that, obviously we’re getting founders funded, that’s great. But two is that the angel investors, of that $7 million, 40% are writing their first check. Meaning we’re getting accredited angel investors off the sideline to write their first checks into these companies. And you know, when we talk to them, because we do a ton of user feedback, it’s like, I just never had access, I never had deal flow. So there’s people out there, ready, willing to write checks and excited about, you know, your company, but they just, like, never were getting the connection.(13:54) So we believe, long term, what our aim is to build a social network where you can follow investors, follow founders, obviously do deals, but you could also follow some of your favorite investors as an investor. So on the platform, I can follow like Allie Webb, the founder of Dry Bar, or like Candice Nelson, the founder of Sprinkles. And when she invests in a deal, it’ll ping me, and then I can look at that deal and be like, Oh, that’s interesting. I kind of want to maybe be part of that. It creates that stickiness for your fundraise for you.
Kate 14:22
Oh, oh, that’s so neat. I didn’t even think about that angle. That makes, like, adds a whole fun component to it. So you’ve been doing this has been in business now for six months?
Jaclyn Johnson 14:33
Yeah, that product has been in the market for 6 months. We’ve been working on it for longer. Yeah. We launched with a newsletter. We were like, let’s see if this is a thing, let’s test the market. So we launched by being like, Hey, who wants deal flow in this curated newsletter? We got 1500 signups in the first few weeks. We then, and by we, I mean Angeline, built a no code version of what we were going to build. Looping things together. Like, are you interested? You know, can we connect you? We ran 40 companies through that newsletter. 100% got deck views from investors they otherwise wouldn’t have. 50% got meetings. 20% were funded in three months or less. So from that essential little test that we did, we went and raised 1.5 million from angels. Spent six to seven months building the beta, then did a closed beta for three months with just like, a small group of founders and funders to be like, what’s missing? Like, what can we do that’s like missing? And one of the things that we learned, and that we built pretty quickly, was a competitor to DockSend. So most people use DocSend. It’s sort of like what everyone uses to share their deck and get analytics. We do all of that and more essentially. So you can share your chair page, you get all the analytics, who looked at your deck, who engaged, who’s interested. And you still are able to get involved in the directory as well for $279 a quarter, versus $179 a head a month, which is what DockSend charges.
Kate 15:56
Okay. Thank you for walking us through that, because it’s a really great example for founders listening on how to test a concept, slowly build it out, take feedback, you know, user feedback, and make some really good changes. That’s amazing. What’s the meaning behind the name?
Jaclyn Johnson 16:14
Cherub is a baby angel. So, like the little cherubs from Italian paintings. So the idea was, like, we would call, like, when we were doing all the prototyping stuff, we would call Angeline a baby angel, because we’re like, how many Angelines are out there where it’s like, you haven’t written your first check, but you’re excited to get started. And then there’s like, the angels that are me, which have like, 25 investments. And so we’re like, really excited about the baby angels. And so we went with cherub as the name.
Kate 16:41
Oh, I like that. Okay, that’s great. And so are you seeing any, like, interesting trends? I mean, is AI big on your platform, like it is everywhere? Or what are you seeing?
Jaclyn Johnson 16:51
Yes, yeah, it’s really interesting. So AI is definitely a big component of what we’re seeing. We have a lot of consumer tech on the platform, a lot of CPG, we also have a lot of exclusive deals, which is really exciting. So we’re rolling out something called Private Rooms, which really came about because angel groups and syndicates were like, I want to work with you. We want to be on Cherub. We have deals. We want angels. What do we do together? So we ended up building a private room where syndicates and Angel groups can create their own private room, put multiple deals in it, and then invite their members into it. So we’re rolling out that future, which is super exciting.
Kate 17:27
Wow, that’s such a neat idea. I love that. Oh, that’s great. So for founders that are getting ready to pursue angel funding, what do they need?
Jaclyn Johnson 17:39
Yeah, so (17:41) we actually have an investability index that we have all of our founders take. We want you to be successful on the platform. Like, I think a lot we ran into a lot of founders being way too early, and not too early in their product, but way too early in the sense that they were prepared to raise. And so what we did is we built a fundraising master class. So we actually have a master class on the site that you can take before you build your Cherub page. And what that does is it gets you a few different things. One it talks about what needs to be in your deck, what docs you need to have prepared, how the different ways you can raise whether it’s a SAFE or convertible note, how to build all of the things that you need to have a successful Cherub profile. Because we don’t want people, the worst thing that can happen is you get on the site, someone’s interested in investing, you don’t have anything set up or ready to go. Like, you need to have all of your docs, your incorporated trademarks, your bank account, everything ready to go. So we’re like, we need to, like, have a course to send to people, Okay, I’m ready now and then you can join Cherub. (18:33)
Kate 18:36
I think that’s excellent. We see that a lot with, like, startup founders. They think they’re ready, but they really don’t have everything you need. And then it can really kind of hamper your ability to raise, because you don’t look as organized or on it.
Jaclyn Johnson 18:49
You have to move so fast on this thing, because it is an impulsive – like we almost talk about it like it’s a luxury purchase when you’re investing in a company. Impulsive in a way. You have to catch them when they’re excited. So the longer you wait, and I believe this about all deals, but like, time kills all deals, so you have to be, like, very prepared.(19:05)
Kate 19:06
That’s great advice. So that actually leads to my last question. We always wrap up the show with this, and it’s one of the favorites for the listeners. Just advice you can share other advice for the startup founders listening. I mean, you’ve had two huge successes already, and I’m sure others.
Jaclyn Johnson 19:23
Again, (19:24)professionalizing your business as soon as you can. And really just meaning, being buttoned up about your financials, your trademarks, your paperwork, your legal, all those things. You know oftentimes, like, businesses surprise you. You start something. You don’t even realize it’s going to be a business. It becomes a business. You get excited. You move quickly. But like, you really have to have those fundamentals in place before it gets too big and out of control. And I think that’s when you can kind of run into a lot of those issues.(19:48)
Kate 19:48
That’s great advice. So where can the listeners go to find more information about Cherub and then also Create & Cultivate?
Jaclyn Johnson 19:58
Investwithcherub.com. We’re on social. We have, like, a great Instagram and newsletter as well. So definitely sign up for that. Createcultivate.com. We do large scale events for specifically women in business, ambitious women. We have our festival coming up in Los Angeles in September. It’s like our biggest event with 4000 women, small business stages. We have content creation workshop, networking and connection. It’s gonna be really fun. So yeah, check it out.
Kate 20:22
Oh, that sounds fun. Thank you. It was so fun to talk to you. I know you’re super busy, so thanks for being here today.
Jaclyn Johnson 20:28
Thanks, Kate. Good to meet you.
Kate 20:30
Nice to meet you.
Intro 20:34
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