What it’s like to Raise Money from Philadelphia Investors
Let me start off by saying I love Philadelphia. I was born and raised in this unique city and have spent the better part of my years here. I also spend a lot of my free time volunteering my skills to the tech community to help spread awareness for countless startups. This includes filming events, photographing them, writing articles about local startups, or mentoring students and tech startup founders to help them use lean methodology to succeed. One thing is clear…I am fully engrained in the tech community around me.
My team and I have proven my current concept and built out a cross platform technology. We have also acquired roughly 150,000 users in just a few short months with hardly any marketing spend. Even with all of this progress, my team and I still find ourselves without any support from the local investment community in Philadelphia. Although Philadelphia investors do seem to throw $500K – $1MM at new startups that fail quickly, they don’t seem to invest in companies that have already proven their value. Noticeably, most of the startups that get funding don’t even have a live platform, they are still building their beta and don’t have any users or customers. Some don’t have any revenue, or plans to monetize (which is mind boggling).
We have been bootstrapping for about a year and a half now and have built a native iPhone app, a native Android app, a Web version, and have received tonsof press and media attention. Bootstrapping is no longer an option. We simply need some capital to scale quickly is this fast-paced market. We don’t have to use the funds to “figure things out”, or “build our beta”. We have already done that on our own dime, quickly, and efficiently with great data backing us up…oh and did I mention we are earning revenue too? The question is, why would investors rather give tons of money to a surefire failure instead of a company like ours that is already successful?
The worst thing happened in an investor pitch recently. When asked where we would spend the money, I answered, “User acquisition, development, and a cheap office for my team to work together.” Then an investor asked where my office currently was. When I answered, “In the basement of my home.” The investors in the room laughed at me and someone said, “Don’t you find that creepy that you run a dating app and your office is in your basement?” Wow, the audacity. If running a lean startup, spending no money on an office, while focusing on growth and creating a product people love is creepy, then that answers my question as to why you throw $500k at the startups that spend $6,000 a month on an office. They last one year on $500k….one year….and then fail miserably. As an FYI, my current startup has run for almost 2 years on only $75,000 which came from friends and family and our own pockets, and we are pretty damn successful with three platforms built and almost 200,000 users! Imagine what we could accomplish with $500K!
So raising money in Philadelphia seems to be a lost cause for the most part. Our current investors are in New York, and so it seems we will have to continue to raise money in NYC and elsewhere…just not Philadelphia. I will continue to support the tech community as always, but there comes a moment when I will have to make a choice. Should I support a tech community that doesn’t support me back, or should I support a tech community in a different city that does support me? Only time will tell.
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