Recently there have been several social media posts by certain entrepreneurs who have failed to raise capital in Portland. A number of comments were made about the Portland investment community including the lack of funding for some “well deserved” entrepreneurs which caused “failure” of their startups. Others have derided attacks on entrepreneur groups that offer programming and support that includes pitch events for entrepreneurs. After some reflection, I am compelled to respond.
A bit of background on me: I have been an entrepreneur for the last 22 years. I still run a 100 plus employee business called First Insight -- my 22-year-old startup based in Hillsboro, OR. Therefore I am one of you, YOU THE ENTREPRENEUR! I can relate to some of the pain and concerns expressed. But, I am also a mentor, an active angel investor and now a venture (mentor) capitalist at Elevate Capital and President of TIE Oregon, a give back organization created by entrepreneurs committed to helping entrepreneurs with mentoring and angel investment. I can see things from both sides of the equation – the entrepreneur and the investor.
Let me start with some historical perspective so you can understand why I and many of my colleagues are deeply concerned by these venting social media posts.
I started First Insight in 1994. As a first time entrepreneur, I had difficulty finding the right local mentors. I ended up with the wrong ones. On the capital front, if you think access to seed capital for startups is limited today, believe me, it was barely existent back then, unless you were in the inner circles of wealthy families. There were no angel/seed funds. Micro VCs did not exist.
A brown guy in a garage like me had little chance of getting that small amount of funding to get started. I was smart to figure that out quickly. So instead of beating my chest and complaining about the lack of capital - I decided to just go about self-funding my product idea. I did that by quitting my job, putting my house to rent, moving into a cheap basement room, living off scraps - eating taco bell nearly every night, spending my savings, borrowing from my credit cards, and consulting with my ex-employer to fund the business for two years without taking any outside capital.
I did not drive a fancy Mercedes SUV or BMW. I drove an 8-year-old beat up stick shift Acura with 100,000 miles on it. I had no time for advocacy and activism. I had “shit” to get done to pursue my dream to create my own business. I simply had no desire to work for anyone else ever again.
Organizations like TIE Oregon were non-existent so my access to good mentors was very limited. I hired a business coach to help me with. She taught me how to sell, pitch, manage my cash flow to build a business within my means. I paid her $1,500 a month and it was worth every penny. In hindsight, I wish I had access to pitch contests and meetings where I could directly speak to investors and entrepreneurs and learn from them. I so wish I had access to education programs like TIE-XL, so I could get a jump start my startup and polish my idea. I so wish I could have connections to entrepreneurs who had raised capital, so I did not have to give away 20% of my company for $82.50 to a shark mentor who promised but never delivered any help to raise investment.
I eventually raised a little capital locally, but most of my capital came from out of town: from customers and $20 Million from institutional venture capital firms, with a plan to IPO. Not once did I complain or belittle the investment community in Portland. My product and market were too small when I started and they did not have the expertise, so I raised capital from those who understood the value of my product and market. That Venture Capital money did me no good. I raised it for the wrong reasons and it nearly destroyed the business I had built. Later, I bought out most of my investors and now have a great self-sustaining business.
A few years ago I decided to pay it forward –when I helped form TIE Oregon with a great group of successful entrepreneurs with a mission to give back. Under its umbrella, I volunteered my time, personal time, to mentor many entrepreneurs. I also put my money where my mouth was and wrote investment checks to not one but over 20 startups in the last five years. Nearly 30 other angel investors in TIE Oregon Angels teamed up and invested over $6 Million in more than 25 startups that produced 4 successful exits in Geoloqi (Esri), Appthwak (AWS), GlobeSherpa (Moovel) and Zapproved with great returns. This was all since 2010.
At TiE Oregon, we have a professional staff of four who are dedicated to our mission of helping both adult and youth entrepreneurs and volunteer mentors who generously give our time and money to “support your cause”. We have a deep interest and commitment to help grow and prosper the entrepreneur ecosystem in Portland metro and Oregon at large. I take offense when my staff at TIE Oregon or any other staff person of any other entrepreneur group in town is directly or indirectly disparaged for the good work they do in the name of constructive feedback.
Today we have a much larger and vibrant group of seed and early stage funds and angel investor groups/conferences including Elevate Capital, TiE Oregon Angels, Portland Seed Fund, Oregon Angel Fund, Rogue Venture Partners, Voyager Capital, Jaguar Land Rover Incubator, Cascade Angels, Seven Peak Ventures, 10 Branch, Angel Oregon, Bend Venture Conference, Willamette Angel Conference and many other nameless angel investors. In my rough estimate in the last six years, these groups have probably deployed at least $350 Million between their own funds and leveraged outside funds in more than 120 startups.
At Elevate Capital, I plan to invest nearly $13 Million in more than 40 seed/early stage startups between two funds, which includes underrepresented (women and minorities) entrepreneurs in under-served regions in Oregon. Mentoring is a corner stone of all the early stage funds and the investment community bends over backwards to support our entrepreneurs by connecting them to early mentors. The same investment community and angel investors that you disparage has not only helped you the entrepreneur but has helped me the mentor capitalist. Elevate Capital wouldn’t exist without their support. Tie Oregon Angels would not exist without active participation of TIE Charter Members. This is a thriving community!
How our vibrant and supportive investment community can be described as “shit” is beyond my comprehension. It is outright offensive!
There are many startups that have received funding locally. Talk to Nat Parker of Moovel and Monica Enand of Zapproved, who built their startups with funds almost entirely from Portland. Talk to the founder of RFPIO who met their investor(s) at a TIE Pitch meeting and founder of Hubb who met her investor(s) at the OAF one minute pitch. Those pitch meetings are invaluable forums for getting your idea out quickly to potential investors, especially when you pivot your business. So don’t disparage them – show up at those events consistently and make use of what they offer.
I am sorry for those of you who have been unsuccessful in raising capital locally and I am sorry if you felt you did not receive the treatment you expected. None of us are perfect, but I can assure you, we have the best of intentions to help. If you did succeed outside of Portland, hearty congratulations! We wish you the best, though I would caution you, the grass is not always greener on the other side. While we have a diverse set of investors locally, we may not always have the expertise to make an educated decision to invest in your well-deserved startup. We diligently work towards exposing our community to larger outside investors, while we build our own money ladder with new funds that provide more access to capital. So I appeal to you to not label our community as shit because it is everything but that.
All of us are vested in your success and we have invested in many more startups in the last six years. And no – these investments are not an entitlement or a handout! So, while you might think you deserve it; contrary to your popular belief, you might not fit our criteria and the only person who can make and break your business is “you” and not the investment community. Don’t blame us because we can’t see the prize pony in your startup. At the end of the day, investors expect at the very least market returns vs burning our hard earned money in “drinking my own kool-aid” ideas that we don’t think will scale, ideas that you so grandiosely think deserve the same attention as companies that do.
And for those who advocate for raising money outside Portland, I say all the power to you. Any entrepreneur raising capital should evaluate all options available to them. So now that you have been successful in attracting outside investment, put your head down and have conversations around making the best use of it to build your business. Don’t whine in the social media peanut gallery with sour grapes conversations that bash our thriving community under the guise of “starting a conversation”. I am sure as hard working entrepreneurs you have much better things to do with your time.
We are open to constructive feedback about improvements but at the same time you don’t deserve a gold star for raising capital. When you do end up with a big lucrative exit, come back as many of us did and put your money where your mouth is. We will welcome you with open arms. In the meanwhile, don’t look in the mirror and shave the superman!
President, TiE Oregon
PS I would like to credit the phrase "Don't Shave the Superman" to my good friend Ashok Rao, former Chair of TiE Global and a very successful serial entrepreneur and investor in his own right. Thank you Ashok Rao for that enlightenment!