Office Hours with Jennifer Lum, RDV Mentor and Adelphic Co-Founder.
Last week at Rough Draft Ventures, we were joined by mentor Jennifer Lum, co-founder at Adelphic (a leading mobile advertising platform), investor, and advisor to early stage startups. Over breakfast, Jennifer shared tips on raising from angel investors and building a business here in Boston. Here’s a recap of the advice Jennifer shared:
When raising from Angel investors, focus on funding amount, speed, passion, and incremental value.
The amount of funding you are looking to raise must be reasonably structured for a group of angels to fill the entire round, typically in the $250k-750k range. Angels tend to move more quickly because they’re investing their own money in industries they extensively understand. Angel investors look for how much incremental value a new founder has built into the business going into the fundraise. If you’re still in the idea phase, focus on raising a small bridge or note. If metrics are off the charts, that could be enough to add institutional firms into your round.
Choose angels you want to work with and understand from the start how you intend to work with them.
There are some angels who are full time entrepreneurs or investors that might not have the time to help out once they invest. In contrast, there are some angel investors who invest full time, may have been in the industry for decades, and want to be hands on with your company. And there are a whole bunch of investors in between. It’s best to be upfront at the time of investment on how you plan to communicate and interact with each investor.
Focus on connecting with Angels in your geography before exploring others, and do this through warm intros.
When you go outside your hometown, the first question you may get from an investor is why isn’t anyone in your city interested? Ideally, you are building momentum in your home town and can leverage that to go outside and seek investors you really want to bring into your business.
Similarly, focus on customers based locally before pursuing customers elsewhere.
If your local market is large enough to address and make an impact, start there. It will be more efficient to sign up local customers than to travel to work with someone across the country.
When choosing a geography for growing your business, think about how the cultural patterns and behaviors map to your business in a given city.
There are definitely cultural differences between geographies. For instance, NYC is the heart of media marketing and advertising while the valley has an incredible startup and tech density and moves at light speed, a benefit to being in closer proximity to companies like Google, Facebook and Twitter. One of the benefits to Boston is that there is a rich history here from both an investor and entrepreneurial perspective. Because it is less dense, people are more open and generally more accessible.
Focus on customers and revenue, and know that it is okay to walk away from a partnership.
Good partnerships are win-win, working closely together to create value. Businesses can have many types of partnerships. Partnerships can help capture a specific type of customer, help accelerate revenue, or serve as a splashy announcement for press purposes. At the end of the day, think about how that partnership augments the business and team. If a partnership is not working and not leading you to customers and revenue, it is okay to walk away at the early stages of building your business.
At the same time, sometimes you need to prioritize long term growth over revenue.
Sometimes new founders have unique insight as to where their industry is evolving. It’s easy to get caught up in what is going to bring the most upfront revenue in the short term. However, if you truly believe that there is going to be a large shift in the industry, focus on where it’s going. If you build the company for the long term and start building up customers based on this belief, you will adequately allocate resources to the right things and end up better off in the long run.
Every new founder should think about how to optimize for mobile interactions.
Even if the company is not inherently mobile, there is a good chance that the customer or user is going to be interacting with the product through mobile in some capacity. It is an undeniable fact that the majority of consumer time spent on digital is mobile. Think about enabling consumer interactions so that your product becomes stickier, making it easier and more enjoyable to engage with your brand. It doesn’t mean you need to build an app. Leveraging SEO and a simple landing page could help enhance your consumer experience and the provide the power you want to build for interactivity with those consumers.
We’re grateful that Jennifer was able to join us and are looking forward to watching her leadership in the Boston Ecosystem!