January 24, 2012
It is certainly no secret that raising money for your startup requires that you have a proven product, a solid customer acquistion strategy, and a sustainable business model. If you’re in DC, though, you have a bit of an uphill battle, as Uppidy founder Josh Konowe shared with me yesterday.
If you’re not familiar with Uppidy, the free app (available for the iPhone, Android, and Blackberry) lets you save, search, and publish your texts in real time. You can link the app to Facebook and Twitter and turn your texts into status updates – pretty cool (I could see this being used with Texts From Last Night and Banters, 2 other text services we just covered).
The app has thousands of users – they just cracked 5 million messages the other day – and, though they are pre-revenue, their business model focuses on freemium and advertising. So obviously, they have all of the above required elements needed to attract funding. I was shocked when Josh told me how hard it was to get DC investors to sit up and take notice – and why he thinks it’ll stay that way for years.
Tech Cocktail: Who did you raise money from, and how much did you raise?
It was actually hard to close that amount. Plenty of firms can help with seed funding or bigger amounts – $2 – 5 million for example – but convincing people that you just need a few hundred thousand is hard to find locally. The fact that we had money from the West Coast helped a lot – and made it a lot easier to raise money in DC.
Tech Cocktail: Seriously? You had to have money from Silicon Valley first?
Konowe: The reality is that angels and venture capitalists are kinda like fraternity brothers – they follow each other. They assume that people who have invested in you have done enough homework on you and are comfortable with what you are doing that you’re worth the risk – and they don’t want to miss out.
Fortify.vc helped out a lot – Jonathon Perelli’s introduction to Band of Angels made a huge difference. Once I had buy-in from them, I could walk around and say, “Hey, I am trying to close a round of x amount, here is what I have and what I need.” Basically, they all just want to know who else is going to a party.
I want to clarify something, though: I didn’t have everything right in my pitches – the introductions are what made a big difference. Once the money was coming in, it just started snowballing.
I also don’t want to start a West Coast-East Coast funding argument, but in Silicon Valley, if you can get money, it means you have something. The Valley is so unique because If you make it with your startup and you successfully exit, you become part of the group of mentors that helps other startups. What they have there is unmatchable. It could happen here in DC, but we’re like 10 years out – at least – from that sort of support system.
Tech Cocktail: So, it could happen in DC?
Konowe: Yeah, it could. It’s the mentor network that makes such a big difference in the Valley, and we have yet to really establish that here because there haven’t been enough huge, godzilla companies spinning out millionaires who can afford to invest significant amounts in other companies – and mentor them. If you’re a startup in the Valley and you want a deal with Facebook or you want to integrate with Twitter, that’s 2 phone calls away – everyone knows each other.
The problem in DC is this deeply ingrained view by people from around the world that nothing happens here. World leaders used to travel to NY and then to DC to see what was going on, and then they’d leave. Now they go to Silicon Valley, maybe NY, but they never come to DC. They want to find what works and replicate that at home – and they think that all the action is out west right now.
Tech Cocktail: So, what will you use the funding for?
Konowe: We are in a big buildup now towards a more stable platform so we can add an API, photo and video integration, alerts and notifications, and hashtag sorting so you can tag your texts, and we will make all the features visible on the mobile app.
If you haven’t tried out Uppidy yet, give it a whirl – and let us know what you think, especially if you use it for status updates on Twitter and Facebook.
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