Hard work, networking help young entrepreneurs
NEW YORK Hey twentysomethings, dreaming of trading in the safety of a regular paycheck to start your own business? There’s no secret sauce. Instead, founders of three companies have obvious tips: Work hard, network and ask for help.
Chicago venture capitalist Bruce Barron, who has invested in companies including food ordering service GrubHub and pet products website Doggyloot seconds that. He counsels young entrepreneurs to be open to advice. Some young company owners “wanted us to write a check and just get out of the way. Those qualities don’t bode well for us. We want to see people who are collaborative,” he says.
Three entrepreneurs who successfully raised money for their companies underscore the importance of hard work, of course — and making friends and playing nice.
FOUNDERS: Adora Cheung, 30, and her brother Aaron Cheung, 25
STARTED IN: Mountain View, Calif., July 2012
THE BUSINESS: Now based in San Francisco, Homejoy’s website connects more than 100,000 house cleaners with customers in about 30 cities in the U.S. and Canada.
MONEY RAISED: $40 million
BIG BACKER: Max Levchin, co-founder of PayPal. Coming out of the University of Rochester, which had no entrepreneurial community that she was aware of, Adora Cheung wanted to learn how startups work.
She joined a Bay Area company, Slide, which was started by Levchin.
IMPRESS THEM: Slide didn’t have many employees when Cheung came on board. “I got to work closely with Max, and he came to know a lot of how I work. He and I work on a very similar sleep schedule,” she says. They would find themselves talking shop at 4 a.m.
FOLLOWING FRIENDS: After Cheung left Slide, she and her brother spent three and a half years trying to come up with a business. They participated in the Y Combinator accelerator program, which helps startups launch. Friends who had been through the program recommended it.
KEEP IN TOUCH: The Cheungs were in debt and needed money for Homejoy. Levchin was the first investor.
“It was very helpful that Max knows me and I think he trusts me. He saw numbers that were going up and to the right. He gave us a bit of money,” Cheung says. After that, other investors wanted in
FOUNDERS: Former Georgetown University schoolmates Nicolas Jammet, 28; Jonathan Neman, 29; and Nathaniel Ru, 28
STARTED IN: Washington, August 2007
THE BUSINESS: Twenty-two shops and 600 employees selling salads, wraps, soups and juices, in Boston, New York, Philadelphia, Washington, Maryland and Virginia
MONEY RAISED: $40 million
BIG BACKER: Steve Case, co-founder of AOL. The trio launched Sweetgreen the summer after their senior year of college.
Over the years, they raised $17 million from about 100 people before landing their first investment from a financial institution in December: $22 million from Case’s Revolution fund.
OLD FRIENDS: When the three had nothing but a business plan and a possible location, they raised their first chunk of money — $375,000 — from 25 friends, friends of famliy, former bosses and classmates.
ASK NICELY: When approaching potential advisers and funders, “meet on their terms” and make it “painless,” Neman says. Give the restaurant where you are meeting your credit card before the potential investor arrives so that the person’s meal or drink is taken care of and he or she cannot fight to pay.
FIND LINKS: Case initially invested in Sweetgreen — personally, not through his investment funds — about a year ago. One of his employees, Evan Morgan, was a friend of the three founders who had also invested in Sweetgreen. Morgan told Case about Sweetgreen and set up a meeting with the founders.
FOUNDERS: Matt Salzberg, 30; Ilia Papas, 32; and Matthew Wadiak, 35
STARTED IN: New York, August 2012
THE BUSINESS: Delivers about 300,000 boxes of ingredients and recipes for home cooks every month. Blue Apron has 130 employees.
MONEY RAISED: $8 million
BIG BACKERS: Jason Finger, co-founder of restaurant delivery website Seamless, then known as SeamlessWeb, and Bob Goodman, partner at venture capital firm Bessemer Venture Partners. Matt Salzberg knew in college that he wanted to run his own business, so he went to work first for Bessemer Venture Partners. He met key advisers there.
PERSONAL CONNECTION: Salzberg had conversations with Finger, then an entrepreneur-in-residence at Bessemer, that went beyond the investment opportunities they worked on together in the office. Finger was the first person who said he would invest in Salzberg’s venture. With Finger’s encouragement, Salzberg left Bessemer before he came up with Blue Apron. A former boss of his from Bessemer, Goodman, was also one of the first investors in Blue Apron.
KNOW YOUR WEAKNESSES: Salzberg had worked in finance and needed people with technology and food expertise. He brought on Papas, who had e-commerce experience, and Wadiak, a chef.
IN PERSON: “It’s really important when you’re raising capital to have people who believe in you,” Salzberg says. And it’s easier to sway them with your passion face-to-face. “It’s hard to convey that through PowerPoint or on the phone. Often it’s through body language.”