Panel Write Up: Marketing to Investors

Panel Write Up: Marketing to Investors

Team Rider Oasis: Kevin Bielawski, Aaron Mass, Andrew Rudzitis, Ping Gong, Jess Hamilton

Introduction

We had the joy of mediating a great panel consisting of two people with a vast knowledge of the angel investing community, and an entrepreneur who is starting to seek out funding for her product. Nathan McDonald is a UW grad who is currently the CEO of Keiretsu Capital which has 315 investors throughout the northwest region and has facilitated $58 million in investment worldwide. Joshua Maher is the president of Seattle Angel which is a non-profit for educating angel investors and fund-seeking entrepreneurs, and he is finishing a book about angel investing. Stacia Pashe is the founder of itBandz which is a knee support system currently being marketed towards women. She has been working on developing the product for the past two years and is currently looking into seeking investment to finance an expansion of the company.

Highlights

All three panelists were asked about how a new venture can seek its first $10K, and each gave the answer of seeking money from “friends, family, and fools.” Stacia also gave a caveat to this piece of advice, as she wanted to emphasize that you should only take money from those that can afford to lose it, and that you should try to seek expertise that comes with your first set of money.

When asked about the ideal pitch, Nathan explained that one should provide just the right amount of information to get people excited about the business and want to learn more. The company should emphasize their top three strengths, and the the business will eventually get to speak for itself during the due diligence process. Josh mentioned that he would want to know how fast the business is growing, what that means for margins and the number of units sold, when the next funding cycle is, and whether the investment will be able to fuel the next stage of growth for the business. Stacia explained that when she has pitched to retailers, she emphasizes the product and herself, but plans to pitch more of the financials and business plan when she pitches to investors.

Josh gave an excellent breakdown of the ways in which entrepreneurs and angel investors can connect. The most common methods are angel groups which facilitate interactions between startups giving pitches, then perform the due diligence and let investors choose which company to invest in. Accelerators and incubators have funding from angels and allow the angels to be heavily involved to get a sneak-peak of the company before choosing to fund more. There is also a growing secondary market which can allow an employee or investor to sell stock while the company is still private.

Stacia broke down the process she used for customer discovery and validation. She took sewing lessons to get the first product out, which enabled rapid prototyping and input from users for future iterations. She was able to sell products 10 at a time to small running stores. All of the initial input came from user feedback, and then doctors and PTs said that it mimicked the knee naturally. Upon hearing this, Josh and Nathan agreed that having the customer validation of a product is a great way to overcome what may be perceived as a lack of expertise of the founder who does not already have a product. If she had sought funding earlier, before the customer validation, angels may have been concerned that she was not a doctor and whether should could deliver on the product.

The conversation also went into pricing strategy where Stacia mentioned that she looked at what the customer is willing to pay, what can your manufacturing processes incur, and what is the competitive landscape, including peripheral products? Josh then mentioned that investors will go and talk to those same customers and ask the same questions. He has found companies who are charging 50% less than what customers would be willing to pay for the product.

When asked about crowdfunding sources, all three panelists agreed that it can be great for validation of a particular product, but may not indicate success for a business. Josh mentioned that successful businesses can have bad Kickstarter campaigns, and vice-versa. One piece of advice Nathan gave is that if a company can continue to build and deliver on crowdfunding campaigns, then the company may not need outside funding beyond the crowdfunding sources.

 

Pronto Cycles – Bike Sharing in Seattle

Pronto Cycles is a new bicycle-share service in Seattle. The concept of a bicycle share is to provide bicycles for short-term rentals throughout a city. The mission of the service is as a public transportation tool to aid people who may generally take the bus into the city, but still require additional transportation options once there. The bikes are easy and quick to check out and are intended for short term trips between destinations.

Pronto Cycle share is pursuing the general commuter as their market. They are disrupting the transportation market by providing a new service which enables people to travel to locations in lieu of personal vehicles, taxis, or buses. Although some users of Pronto Cycles may be using the bicycles for recreational purposes, the primary intent is on disrupting the commuter travel industry. This is demonstrated through the selection of stations locations was based on the proximity to businesses, schools, and retail locations. Instead of placing stations near convenient trails for recreation, the stations were situated in order to maximize use for standard trips users might make in the normal course of a day. Additionally, the pricing structure was also determined with the goal of encouraging quick trips between stations. Instead of pricing by the minute or trip, Pronto instituted passes which grant the passholder unlimited 30 minute trips. Passes may be for 24 hours, 3-days, or 1 year. This structure is meant to encourage short trips which may have otherwise occurred with a car or bus. The education program which Pronto has instituted in order to market the system is also geared towards educating consumers about how they might be able to utilize the service to avoid making an extra trip in a bus or car.

Pronto Cycles has positioned themselves as a public service which can be used as a supplemental travel option. In order to reach their first customers, Pronto relied heavily on word of mouth, press, their website, and social media. Although bike sharing services had been introduced in other cities, Pronto found a need to educate users in Seattle about how this could be used and what exactly a bike share service was. In order to help gain input and educate potential customers, Pronto held community forums. Currently, Pronto has over 2,000 followers on twitter @CyclePronto. Additionally, Pronto made use of their website and an email newsletter list to reach their first customers before and after they launched. Due to the very public nature of the service, Pronto was able to leverage the media in order to gain exposure. In particular, by being a local service, Pronto was featured in local media columns detailing the progress towards implementing the service, and announcing public forums which Pronto used to gather customer feedback.

In addition to finding their initial market, Pronto has been continuing to work to reach more customers. In order to find more customers, Pronto has reached out through bicycle advocacy groups and social media campaigns. Pronto is working to engage their customers by providing a social media campaign which encourages users to find a specially-colored bicycle and post pictures. A large part of Pronto’s mission and method to increase users is driven by getting their users to change their habits, so their marketing campaigns have been organized around encouraging people to consider biking as a mode of transit. Pronto regularly engages with their customers in order to generate interest and keep customers returning. For example, Pronto helped encourage and sponsor a race which involved using Pronto bikes to get to different locations around the city.

 

Blog 4 – Clothes and bike parts!

I typically do a fair amount of shopping online, and I have found that whenever I shop for clothing, it tends to pop up all over the place on the pages I visit. Two retailers that are particularly notorious for this are BetaBrand and MyHabit (run by Amazon). I have found these ads on a variety of websites, including sports blogs that I visit and Facebook. I have found that for clothing, these ads typically are effective, as I am reminded that I wanted to buy the item, and am encouraged to return to the site at some later point in time.

Recently, I have also been “shopping” for bike parts online in support of the Rider Oasis homepage. I have seen a variety of these parts located on websites, which might be useful at some point in time, except that I was merely browsing for the parts, so it seemed ineffective here. One comical ad I noticed was for a particular bike which I browsed on Amazon after being shared a link with how ridiculous looking the bike was. I often research products for one of my positions, and find that I still get targeted ads for products which I never intended on buying.

RosterBot

For blog 3, I was interested in RosterBot. This is a tool directed towards managing recreational sports teams and leagues. The application has features for managing schedules, standings, invoices, and rosters. I would reach out to the following three people to gain press about this company.

Greg Wyshynski (@wyshynski)

Greg Syshynski is a hockey blogger for Yahoo, and would reach a large audience of participants in recreational hockey leagues who might otherwise not pay attention to typical technology and lifestyle blogs.

Mark McClusky (@markmcc)

Mark McClusky is a writer for Wired who commonly reports on sports-related topics. His recommendation of the product would likely reach a connected audience who may have kids in sports leagues, or be in a variety of recreational sports leagues themselves.

Dave Greenbaum (@calldrdave)

Dave Greenbaum is a contributer to Lifehacker, and has perviously reported on a similar app. Interest from people who follow Dave would likely capture tech-oriented people who may find uses for the application beyond its stated use for sports teams and leagues.

Blog 2 – Beeline Bikes

Beeline Bikes is a mobile bicycle shop which offers all of the traditional shop services, including maintenance, new bike sales, and bike part sales. Beeline requires a scheduled appointment to provide the mobile bike service, but adds convenience by coming to the customer at the home or office.

Beeline Bikes is focusing on their website and social channels to do their marketing. They have a promotional video which demonstrates the service, which has a primary message of convenience to the customer. They use social channels of Twitter, Facebook, and Google+. These social channels are being used effectively to show how the service is being used by different customers, and to create an aspirational message of where one could bike after using the service.

Beeline Bikes appears to be positioning themselves as a more convenient alternative to a traditional bike shop. They do not offer services beyond a typical shop, other than the convenience of showing up to your house. The value proposition of the company appears to be convenience to the consumer by eliminating the task of hauling bicycles to a shop whenever they need tuneups or other services. Beeline appears to be successful in communicating to their target customer. In addition to online channels, Beeline has also partnered with community organizations around bicycling, which will likely lead to exposure to customers in the target market.

Exo Labs – Market Analysis

In order to capture the attention of young students, hands-on and up-to-date activities are necessary, which is why Exo Labs is marketing a new iPad-compatible camera for microscopes. Traditionally, students are stuck looking into an old microscope and outdated slides when studying objects under a microscope. Exo Labs is trying to capture the student (and teacher) market through the use of a versatile and simple camera for microscopes.

It appears that Exo Labs is attempting to replace traditional microscopes and educational tools which are either too powerful and expensive, or too cheap and destructible. Exo Labs is attempting to capture a market whose users require a usable and durable microscope, but may not need the complex analysis that more expensive systems offer. In order to capture this market, they are first going after educators and students, but they are also working to implement it in traditional research settings and showcasing these efforts on their blog. There are a large number of microscope cameras specific to high powered microscopes, which is perhaps why Exo Labs decided to approach the academic market which has a much greater concern with budget and actively engaging students. In order to put cameras into the classroom, Exo Labs is approaching teachers and administrators to show them the usefulness of the device. In addition to the hardware camera, the company maintains an iPad app which enables schools which already make use of iPads to integrate it into their curriculum.

A key component of Exo Labs marketing is their blog in which they showcase how different users are making use of the camera and iPad software. The blog showcases how teachers and students have integrated the camera and software into different activities, which is great for gaining a teacher’s attention. Additionally, the blog has showcased how scientific staff is also using the Exo Labs camera to help further their research, which will likely help the company gain more traction as it adds researchers into its target market.