stream founders.JPG

  • In April, Stream co-founders Lan Paje, Paul Klein, and Jun Ho Hong spent a sleepless weekend hacking away at their startup idea, a Patreon alternative. 
  • The founders applied to Y Combinator and were accepted but turned it down and instead fundraised from angel investors and boutique, early-stage VC firms.
  • Here's how the startup raised $2.1 million in one month from rising stars in the VC/startup world.
  • Visit Business Insider's homepage for more stories.

As COVID-19 upended life in the US, Stream CEO Lan Paje thought it might be a good idea to build a Patreon alternative for content creators stuck at home during lockdown.

In April, he invited his two friends Paul Klein and Jun Ho Hong, to spend a sleepless weekend "hacking" away at his new idea, Klein told Business Insider.

By the end of the weekend, the trio had gotten their initial prototype off the ground and were hosting their startup's first event. 

"The first event on Stream was actually us reading bedtime stories to our friends," Klein said, acknowledging his surprise that they got the project up and running so quickly.

Similar to platforms like Patreon and Jemi, Stream helps creators manage livestreams and recorded classes. The startup already has thousands of creators from across the US offering live and recorded classes, including the California Symphony, yoga instructors, basketball coaches, and professional knitters, Klein said.

Right now, users pay $10-$20 to participate in virtual classes of 10-15 people, although Stream plans to add a membership fee down the road. 

Their prototype landed the trio a spot in the Y Combinator startup accelerator summer 2020 class, but they turned that offer down. 

Instead, the founders "took advantage of the remote work culture," Klein said, and started meeting with as many investors as possible, raising $2.1 million in what's known these days as "a pre-seed" round, doing the fundraising entirely over Zoom last May.

"There's so much venture money right now for early-stage startups," Klein explained, referring to angel investors and boutique early-stage venture firms. 

Klein says the secret to such fast success was using On Deck, a platform and fellowship program that connects entrepreneurs with VCs from a wide number of firms, including Founders Fund, Sequoia, and Greylock Partners. 

On Deck is where the Stream team met VC Erik Torenberg, whose early-stage firm Village Global became one of the startup's first institutional investors. In an email to Business Insider, Torenberg said his firm decided to invest in Stream because the startup "is taking advantage of a monumental shift from live events to virtual and the broader trend of more and more people becoming independent creators." 

Torenberg said Stream stood out to him because it's tackling a "massive, growing market" while still placing a great deal of emphasis on building a robust "product & engineering team." 

The founding trio, who have worked at startups backed by firms like Founders Fund, Bessemer, and Andreessen Horowitz, also convinced their former bosses to chip in to the pre-seed round, including rising stars in the startup world like Omni COO Ryan Delk and DoNotPay CEO Joshua Browder. These investments reflect the larger trend of CEOs investing in their former employees. 

Stream hasn't focused on marketing, so it's growth has been entirely organic, Paje said, and he attributes the early signs of success to an intense focus on its target customers.

"All of us talk to our customers every day," Paje said, adding that the startup sees itself as "partnering with our creators." The startup's first full-time hire was a customer success manager. 

Klein added that, because of the recent startup layoffs, cancelled summer internships, and the shift to remote work, the time for recruiting top software engineering talent has never been better. The co-founder said the team's three remote summer interns have been instrumental in the startup's early success. 

With the influx of cash, the startup is hiring for roles in product design, software engineering, and growth marketing.

While they plan to build a distributed team, the founders said they are also taking advantage of cheap short-term rental prices and have been living together in Airbnb rentals for a month at a time in cities across the US, most recently in Portland.

SEE ALSO: A former Apple TV designer built a livestreaming startup to challenge Twitch, and he's betting the key to winning will be live rap battles

Join the conversation about this story »

NOW WATCH: The rise and fall of Donald Trump's $365 million airline

The text above is a summary, you can read full article here.