How to guarantee you’ll be able to raise capital in smaller markets.
In the competitive world of fundraising, there’s a myth that it’s harder to raise money in smaller markets. Most founders think you have to be on the coasts to start your business. After several years of investing and fundraising in a small market, I don’t believe that’s true and here’s why…
This past summer, Techstars Retail completed its first program with Target in Minneapolis. The Twin Cities has admittedly not been known as a hotbed for venture capital — but that is quickly changing. After just a few months, our companies have already collectively raised almost $15M, with another $5M to $10M coming soon.
This wasn’t a fluke. We put forth a set of guidelines that our startups followed to gain traction for fundraising in smaller markets.
If you want to raise money in a smaller market, here’s how:
Get Local Support
No matter how small. Get to know every investor in your region. Find out who has invested in local companies, what founders are from your town, what startups have come from your market. If you want bigger investors, you first need to demonstrate that you have local support. It’s great signaling.
Go to the VC
If the closest investors are not next door, get on a plane and create reasons to go visit. Do your homework and ask for a referral first. Get on a plane, show up, and network. You can’t be passive – you have to be aggressive and go to where the VCs are. Then, when you get those meetings, shine the light on your city.
Join an Accelerator that is Not in Your Geography
Tap into funding sources that would otherwise be unreachable. Bring them to you. This gives you a “shiny-effect” for tapping into your local market once you return. Check out Techstars programs – we now have over 20 accelerators in over 16 cities across the globe (including smaller markets like Austin, Boulder, Kansas City, Atlanta, etc.).
Understand Where Your Company Fits
Understand where your company fits into the greater tech ecosystem. Who else is doing the same? How are you different? Where is your opportunity? Where is the engineering talent? What is the cost of living? Know your market better than anyone else. Then, get the data about why your company can and will thrive in your locale.
Create a Great Business with Great People
It’s sounds cliche but it simply cannot be overstated. Bad businesses or bad founders will have trouble fundraising. Get your act together and surround yourself with an awesome team. You have to be on top of your game in every way in order to convince others to believe in what you’re doing enough to invest in you.
Don’t let people tell you that you have to move to the coasts in order to build a successful startup. Techstars believes that great entrepreneurs are everywhere and we are building a global ecosystem to support you. Join us!
My 2017 has been off to a hot start. First off, we opened our applications for our 2017 Techstars Retail Accelerator in partnership with Target. Then I was able to attend, or more accurately survive, both CES and the NRF Big Show. After walking the floors of these events, talking with our corporate partners, and meetings with hundreds of startups, here are some trends I’m seeing for 2017 for retail technology for startups.
#1 – Serious Supply Chain Investment
Target recently announced it will be spending $2.5B on their supply chain in the coming years. Amazon spends $13B annually on R&D and Alibaba is plans to spend $16B on supply chain improvements. These numbers are massive and scream opportunity for supply chain focused startups.
#2 – Voice-enabled Purchasing Will Become Less Weird
Amazon Echo and Google Home were both breakout products in 2016. While at first this voice-based interface seemed weird, consumers quickly saw the benefits of a voice-based operating system. Today, these devices are mostly used to control your home or play music. The holy grail for retailers is turning these devices into commerce platforms. Startups who help existing retailers or e-commerce companies integrate with these emerging platforms could see a lot of opportunities to partner in 2017.
#3 – Integration of AI Into Everything Retail
Artificial Intelligence is the new Mobile for Retail. While most retailers have a “mobile strategy”, they now must contemplate their “A.I. strategy”. A.I. will quickly work its way into almost every facet of retail. I expect to see record levels of investment into A.I startups for retailers. This is both for backend of the retail machine or consumer facing products that help inform consumers to improve conversions.
#4 – Store as a Distribution Center
Brick & mortar stores are uniquely positioned to fulfill same-day orders online. However, this can be a supply chain/logistics/delivery nightmare and most retailers are not ready. This incredibly complex, highly technical problem is ripe for startups to solve.
#5 – Groceries Will Become the Next Hot Area for Membership + Delivery
Consumers buy only two percent of their groceries online. The grocery industry is $700B. Think about that for a second. How many times a week do you visit a grocery store and buy the same items? I bet it is many more times than you research and buy a flat-screen TV. My point is, this is a prime area for disruption. I suspect consumer adoption of online grocery purchasing and delivery will grow.
#6 – Retailer Startup Investment and Acquisitions Will Heat Up
Traditional retailers investment and acquisition activity lags behind other markets. Their are some notable exceptions (see Inspectorio and Jet.com), but I believe this will change in 2017 as more retailers look to the startup market for “outsourced R&D”.
Do you have any other retail startup trends you are tracking this year? Are you a startup looking to disrupt retail? Let’s chat!
Hit me up on Twitter (@rbroshar) or submit your application for Techstars Retail today.
This month at CES, we hosted a panel of industry players to discuss product-based startups oftentimes tumultuous path to market. The panel included:
- Jacqueline Ros, CEO Revolar
- John Vaskis, Head of Hardware, Technology and Design Sales Indiegogo
- Tim Paulus, VP of Sales Arrow
- Cory Hooyman, Innovation Lead Target
The conversation was very insightful for how a product-based company like Revolar was able to navigate all the steps to market represented by the other panelists. Some of the insights included:
Creating a Product is the Easy Part
Most product-based startups are product-obsessed…as they should be. However, many times this gets ahead of the the question, “Will anyone purchase this once I build it?” Then if someone is willing to purchase it, “Will I actually be able to manufacture it, finance it, and provide customer service for it?” Considering these questions earlier in the process ensures time and money are not wasted on product development.
Buyers Treat Their Positions Like Small Businesses
When approaching a buyer about your product, it’s best to remember that they treat their product line like a small business. You must make a business case for why they would take your product over the other hundreds of products the should consider. Be ready for this and provide proposals for win-win situations.
Treat Your Vendors Like Co-Founders
For most product startups, you’ll most likely rely heavily on component vendors for the bulk of your product. Someone else will manufacture, test, or even engineer your product for you. Treat these vendors like co-founders and choose them wisely. They can literally make or break your company.
You Will Always Need More Money
While this may be true with most startups, it is especially true for product-based startups. Lots of money must be spent with vendors, retailers, R&D, marketing, etc before you even launch a product and hope to see revenue. If you’re seeking venture capital to fund this, you’ll always need more than you think. Make sure you raise enough to provide the runway needed for success.
If you’d like to learn more about getting a product to market, please feel free to reach out to me.
Applications for our next Techstars Retail Accelerator in partnership with Target can be found here.
I’m excited to announce that we’ve opened applications for the 2017 class of Techstars Retail in partnership with Target. You can apply online here. Applications are open through April 9th and the program starts in July.
Recapping Last Year
In case you missed it, our first year of the Techstars Retail accelerator was a massive success. We had 11 startups from all over the world descend upon Minneapolis for the summer. They received mentorship throughout the program from Target’s senior leadership, successful retail-tech entrepreneurs, and investors from across the country.
Watch this video for a great overview of the program.
Our Demo Day was a blur but it was incredibly exciting to see almost 1,000 investors, mentors, Target team members, and supporters from all over the Twin Cities startup community show up and support our companies.
And wow — did they kill it! Here are some highlights of what was accomplished by our startups during the program:
- Inspectorio – Announced in just 11 months, Inspectorio has already completed 2,000 inspections for 21 clients in seven countries. They recently announced closing a $3.7M funding round led by Target.
- Nexosis – Announced the company saved more than $90,000 in one location in a pilot with Pepsi this past summer and they are integrating into the Shopify e-commerce platform. They recently announced closing a $5M Series A round
- Branch – Shared the results of their successful pilot program with Target stores and plans to move headquarters to Minneapolis. Branch is will soon announce the closing of their seed round.
- Revolar – Announced a partnership with the National Domestic Assault Hotline and university campuses to tackle campus assaults in 2017.
- Blueprint Registry – Announced multiple partnerships that is expected to increase the number of accounts on its site to over a million. They recently announced closing a $1M seed round.
- Spruce – Started the program as one company and ended as two. Spun out technology company, SpruceBot, from their retail location and are on a mission to exponentially improve the customer retail experience for millennials.
Since our program has wrapped up, our companies have already collectively raised almost $15M, with another $5M to $10M coming soon. Stay tuned, as many more partnerships and deals are in the works to be announced this year.
What to Expect in 2017
For 2017, we expect to once again find the top retail tech startups from around the world and welcome them to Minneapolis for the summer to our beautiful working space located, literally, within Target HQ.
Have a disruptive retail technology startup? We’d love to chat. We’ll be visiting New York City, Cincinnati, Toronto, Waterloo, Seattle, Portland, Miami, Austin, Washington DC, Boulder/Denver, San Francisco and Los Angeles to discuss our program. Simply send an email to firstname.lastname@example.org to coordinate.
All in all, it was an incredibly successful first program and we are already looking forward to the next! Apply today!
I’m thrilled to announce the 11 companies that will be joining us for our first 2016 Techstars Retail Accelerator, in Partnership with Target in Minneapolis. Our program officially kicks off next week on Monday, June 20th, and are looking forward to three wild months of acceleration. Our program will be capped with our Demo Day at Orchestra Hall on Tuesday, September 20th during Twin Cities Startup Week.
When recruiting startups, we strived for diverse ideas and founders. I think we nailed it as more than ½ of our startups have a female founder and two startups are from outside the United States. This aligns perfectly with both Techstars and Target’s sincere commitments to diversity.
This is the first year of our program and we’re fortunate to have over 150 incredible mentors from the Twin Cities startup community and Target. Thank you, mentors! We couldn’t do this without you.
It is going to be a great summer in Minneapolis and we can’t wait to kick things off next week. By leveraging the expertise, mentorship and resources that Techstars and Target have to offer, we are anticipating big things to come!
Follow all the action via twitter at #TSRetail.
Without further ado, here are the 11 companies joining the 2016 Techstars Retail Accelerator, in Partnership with Target:
AddStructure: AddStructure helps consumers discover products across any retail search channel (organic, on-site, mobile, voice, chatbot) using their own unique voice.
Blueprint Registry: Blueprint Registry is a life-event driven marketplace based on your home’s blueprint – shop or register for products from a variety of retailers in one native platform.
Branch Messenger: Branch Messenger is an application that helps retailers reduce absences and increase productivity by improving company-wide communication.
Inspectorio: Inspectorio is reinventing the way quality inspections are performed. Using data and machine learning to help retailers verify supplier compliances and bring transparency to their supply chains.
Itsbyu: Itsbyu is the do-it-yourself wedding flower kit company; make your own wedding flowers and save up to 80%.
MakerBloks: MakerBloks is a dual play experience that combines electronic building blocks with digital activity books.
Makerskit: Inspiring creativity with online and in-store experiences paired with fun DIY kits and artisanally made goods sold in over six-thousand stores.
Nexosis: Nexosis provides retailers an automated machine learning platform enabling better data driven decisions.
Revolar: Revolar is a wearable safety device that encourages you to live a more vibrant and fulfilling life, knowing you can ask for help in a heartbeat by sending location-based alerts to trusted contacts.
Spruce: Spruce has built a platform that allows brick-and-mortar retailers to customize the experience for their customers in the same way we’ve come to expect from online retailers.
Good and Gather: Good and Gather is a food brand where transparency and responsibility meet.
At Techstars Retail, we recently wrapped up a cross-country info session tour where we met with founders and discussed our upcoming accelerator program in partnership with Target. The response has been overwhelmingly positive and we can’t wait to kick things off this summer!
During the course of the tour, we fielded a lot of questions around, “How do we work with Target?” This was primarily around retail technology and products looking for distribution. The more we dug into this, the more we realized this process can be a bit of a black hole for growing startup companies.
To help shed some light on this process, we are excited to partner with Target and hold a webinar this Friday, February 19th at 1 p.m. CST titled “Demystifying Big Retail for Startups.” I will be joined by Kate Whitcomb, Growth & Innovation Lead at Target — and together, we will break down the steps startups need to take to engage large retailers.
We will discuss a variety of topics, including:
- How does product get updated in a retail store? Who makes those decisions?
- What does a buyer do, and what does their team look like?
- What kind of questions will a buyer ask me if they are interested in my product?
- If a buyer is interested in my product, how long does it take for my product to hit the shelves?
- How many units might I be expected to fulfill in the first PO (and what’s a PO?)
Application deadline is March 20th and the program kicks off in June in Minneapolis! Apply now!
The Techstars Retail Accelerator in partnership with Target starts this year, and applications are now open. We are looking for 10 retail technology startups that are looking to disrupt the $22 trillion retail industry. Sound like you? Let’s chat!
We are jet setting across the country in the coming months to meet with founders and discuss this amazing opportunity in Minneapolis this upcoming summer. We’ll be visiting New York, Boston, Minneapolis, San Francisco and Seattle to meet with awesome founders building innovative retail technology.
We are looking for startups that are rooted in fundamentally improving the customer retail experience. This is fairly broad but can be applicable to everything from online, in-store, delivery, distribution, manufacturing, payments, logistics and beyond.
Techstars and Target will be on hand to explain this further, explain the perks of the program, and answer questions about the program. Food and drink will be provided.
2016 Info Sessions:
- New York City, RISE NYC: January 19th, 6:30-8:30PM – RSVP Here
- Boston, General Assembly Boston: January 21, 6:30-8:30PM – RSVP Here
- Minneapolis, Target Plaza Commons: January 26th, 5:00-7:00PM – RSVP Here
- Seattle, Startup Hall: February 9th, 6:30-8:30PM – RSVP Here
- San Francisco, Target Open House: February 11th, 6:30-8:30PM – RSVP Here
If you can’t join us for one of our information sessions in person, please join us for an online webinar. Ryan Broshar will lead a presentation on the program with time for Q&A from participants.
- February 2nd – Click here to sign up and attend
- February 16th – Click here to sign up and attend
- March 2nd – Click here to sign up and attend
- March 15th – Click here to sign up and attend
- March 17th – Click here to sign up and attend
2016 Key Program Dates:
- Final application deadline: March 20th
- Program begins: June 20th, 2016
- Demo Day: September 20th, 2016
Interesting in joining the program? Apply now!
I’m excited to announce today that I’m joining Techstars to serve as Managing Director for the new Techstars Retail Accelerator, in partnership with Target, in Minneapolis. I cannot think of a more ideal local corporate partner than Target to help bring the power of the Techstars network to Minneapolis! Target is a proud startup supporter that continues to push boundaries in design, customer retail experience, and, now — technology.
The retail industry is massive — and we are about to disrupt it. Worldwide, total retail sales were more than $22 trillion in 2014. That’s trillion with a “T.” No other industry integrates into every aspect of today’s economy and our day-to-day life. Retail technology is a huge opportunity and to most observers, still in its infancy.
This is not the first time my path has crossed with Techstars, and in a way, it brings things full circle for me since I hastily packed up a truck and moved with my wife to Boulder from Minneapolis in 2008. I had just been accepted into the CU-Boulder MBA program and was looking for new opportunities and a change of scenery. Having recently sold my first business I started while at the University of Minnesota, I was eager to continue my founder journey under the backdrop of the Rocky mountains. Boulder was undergoing massive transformation at the time, and when I left in 2012, this small city was firmly planted amongst the top startup communities in the U.S.
When we made the transition back to Minneapolis, I plugged back into the startup scene and was impressed by the quality of founders and startups here. It was clear that there was something special brewing.
As I surveyed the startup scene in Minneapolis, I wanted to help connect Minneapolis founders to the rest of the world. I decided to create Matchstick Ventures to help fund early-stage tech companies in the Twin Cities and in other startup communities across the country. I also co-founded Beta.MN to showcase local startup companies and provide networking opportunities and connections for founders. Finally, I co-founded Twin Cities Startup Week to further unite and shine a national spotlight on the startup community.
What was missing all that time? Techstars! Which is why this announcement is such an exciting day for me and why I am so bullish on Retail + Techstars + Target + Minneapolis combination. I’ve been involved in the creation of this program helping to drive initial discussions and can’t wait to get it up and running. I’ve seen firsthand how Techstars can be a force for good in the cities it operates in and I’m excited to bring it back home to Minneapolis.
Have a startup that plans disrupt the retail industry? Let’s chat. Hit me up at email@example.com or on Twitter @rbroshar.
The program will kick off in June in Minneapolis. Applications are open – apply here!