Dads Strap In: Fatherhood Might Make You An Entrepreneur & Master Fundraiser
When Jon Sumroy walked into the Transport Research Laboratory and asked for a crash test on a booster seat prototype he had cobbled together from canvas sheeting, straps and mountain-climbing equipment, it was laughable. Until they did the test.
This Dad of four started out like many of you. He saw a need, came up with a million dollar idea and then did nothing with it for 12 years.
This may not describe all entrepreneurs but many of us weren’t in the place in our lives to devote our attention to our invention the first time it occurred to us. We were busy devoting our attention to our day-to-day work and raising our kids.
The need Sumroy identified was a car seat for every kid that’s portable. Back in 2000, his kids were in Englewood, New Jersey carpooling with other parents to hundreds of activities and no one had a car outfitted with the proper safety seats for a load of kids.
Fast forward to 2012 and a friend emailed him a study done by the University of Michigan showing that 50% of people carpooling still don’t have a car seat for all the kids they are hauling around. This time Sumroy decided to act and began his prototyping madness in his garage.
Mad scientists need money—particularly to launch a consumer product
Sumroy’s own capital was enough to get the prototype created and the proof of concept advanced for what is now known as mifold. But launching consumer products is an expensive business.
He needed to consult with industrial engineers and product designers. He would need to invest heavily in molds. And he had to be prepared to afford regulatory testing and approvals that are very costly with child safety devices.
As Sumroy put it, it wasn’t enough to get the device approved. He needed the cache (and higher price) of highly respected, reputable testing partners to lend immediate credibility to his product.
Rapidly raising Angel capital—find people with skin in the game
Sumroy knew from years in business that he could raise some capital from his own network. But he needed bigger capital fast.
He credits his success in his Angel round with finding people who could connect him to capital in exchange for a referral fee. These individuals have broader investor networks and can move fast.
In just 3 months, at the end of 2013, he was able to raise $600,000. He used this money to develop a network of material science experts, patent professionals and mechanical engineers to get into pre-production. And his story was about to get very interesting.
Some entrepreneurial pursuits demand bigger money – Moving on to VCs
In early 2014, no sooner had he secured his Angel round to help with pre-production, he knew he needed more. Manufacturing is a capital-intensive beast. And commercializing requires more than money for product development.
To continue scaling, he needed to recruit people into his company. He was not creating a product now, he was creating a company. He needed more on-staff engineering know how and he desperately needed marketing.
Sumroy wanted to find a single VC who could go big and fast. His projections showed he would need at least $1 million dollars to keep moving with the wind at his back.
But to do that, he had to find a VC passionate about his product. Now located in Israel, one of the high-tech startup capitals of the world, the VCs weren’t interested in child safety products. Remember, you may have to scout your capital and investors elsewhere if your local crop of VCs aren’t that into to what you do.
Jamjar of the UK was all about his idea. They liked that his product focused on consumer safety. They lead the round and by late 2015, mifold had raised $1.2 million. Although Sumroy only wanted $1 million, those all-important early Angels wanted to keep pouring in to this exciting venture.
So surely you now have enough money – but crowdfunding is good marketing
Sumroy intended to stop raising money and get to market. He had recruited an Italian college graduate, Davide Gandus, to support his marketing and social media efforts.
Davide felt that the best way to introduce the product would be to launch with a crowdfunding campaign. Many hot products were launching with crowdfunding because it enables you to:
- Gauge early interest
- Create an ‘event,’ the early crowdfund launch, to create publicity
- Show market progress and consumer demand to your early stage investors
Sumroy chose Indiegogo for his platform. They set the target at $40,000 and thought they might be able to pre-sell $100,000 worth of product.
Davide worked his magic in the run-up to the launch, building their presence online and ‘leaking’ information about the product to the press. Gandus even went live with the crowdfunding video a full month ahead of launch to ensure interest was piqued on day.
Be careful what you ask for. Market success might make you change your plans
On July 14, 2015 the crowdfund campaign launched and in just 2 hours they hit their $40,000 target. By the end of the first day they had reached $150,000.
Sumroy had only projected first year revenue in 2016 at $250,000 and yet by the third day of their crowdfunding campaign in 2015 they had beaten this target. He says when they finished the campaign in September of 2015 they had $700,000 although Indiegogo now shows $1,981,281.
He also got a serious wakeup call. They had to rethink their plan immediately.
They decided to keep the product on Indiegogo’s InDemand section for order placement because Sumroy says it is far cheaper than other online retailers. It would also enable them to continue counting consumer confidence as they worked with investors to adjust their commercialization plan.
Sumroy credits the huge success of his campaign to more than the product’s appeal. He feels the marketing strategy was critical to getting immediate and continuous visibility. For this, he thanks his marketing guru, Gandus, and key partners RainFactory, a digital agency, and Pitch Public Relations, his PR firm. Video has been a critical part of their launch, both explaining how the product works and enabling Sumroy’s natural spirit to breed confidence and interest in mifold.
What do you do when success comes faster than you expected? Accept new investors.
Although he talks about the grueling nature of entrepreneurship, he is amazed by the support of his family and wife, Rhoanna. His story seems touched by magic.
Right when he needed to pivot to support demand for mifold, he received an InMail on LinkedIn LNKD -0.25% asking if he was still accepting investments. Imagine his surprise when he realized the message was from Riccardo Zaconni, the CEO of King Digital Entertainment (creators of Candy Crush Saga). Zaconni had just launched a VC fund and is now helping Sumroy get to the next stage.
Sumroy has this advice for other entrepreneurs
- Success breeds interest. By blowing through everyone’s expectations, a lot more people take notice. There is so much interest at present he can focus on the product because he doesn’t have to seek capital. The money keeps coming to him.
- Build success metrics at the beginning. Although Sumroy doesn’t know how he would have managed his launch differently, he would focus on success measures earlier. If he had better measures, it would have helped him better negotiate terms during rapid funding rounds.
- Thicken your skin because rejection is plentiful. It was hard for Sumroy dealing with rejection when he first tried to raise money. He said he heard no at least 100 times before he heard yes. He advises entrepreneurs to believe in what they do and stay focused; then the sound of no will be like water rolling off a duck’s back. When he heard no, he told himself the loss was theirs.
- Listen for the nuggets of gold especially in those that won’t fund you. Each time someone says no, or lacks enthusiasm, they may share an insight that could help you change your pitch or your product. Take advantage of each rejection as an opportunity to do things differently.
- Respond to every comment—everywhere—about your product. With such an aggressive social, digital and PR campaign, people will talk. Don’t leave them to do it in a vacuum. Respond to everyone and be grateful for their feedback.
The harder you work, the luckier you get
The above quote has been ascribed to a lot of people. Whoever said it, Sumroy’s case study appears to validate the sentiment.
Sumroy, like many of the most impressive and enjoyable entrepreneurs I speak to, is an optimist. He is honest about how hard he has worked and how demoralizing the rejection has been. And yet, he kept at it.
Now, there is plenty of momentum behind his invention and the capital is plentiful. Sumroy remains flexible and incredibly open to input. Those are qualities that, when matched with vision, are magnetic to investors.
The only down side to waiting all those years to develop his car seat is that his 4 children have outgrown using it. They were the very source of his inspiration as a father and an entrepreneur.
Happy Father’s Day to all the entrepreneurs that draw inspiration from their children every day. No doubt now, as an entrepreneur, Sumroy can also be a source of inspiration to his children.
If you can dream it, and work hard enough, you can do anything.
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