Entrepreneurs Need More Than Money, They Need Your Help

Innovation is a cornerstone of the U.S. economy: New businesses and those that are less than 5 years old are the primary source of all new net job creation. That’s a fact.

American entrepreneurs transform industries. From Henry Ford, to Steve Jobs, to Sam Walton, they create scalable solutions that change how the world operates, and their ideas and innovations create entire industries. In fact, these three entrepreneurs alone helped create millions of jobs.

But life isn’t always easy for new businesses. These entrepreneurs need capital in order to grow, and often that capital can be hard to come by. How hard? Nationwide, we estimate there is a shortfall of at least $8 billion per year in venture investing, and we at iSelect are focused on fixing that funding gap.

But funding is only one part of the puzzle. New businesses need more than just money to succeed. They need talent, they need customers and, most of all, they need help. If we’ve learned anything from the example created by Silicon Valley itself over the last 50 years, it is that entrepreneurship cannot function in a vacuum. It needs community to survive and thrive.

Why is it that Silicon Valley works so well? There are four key components to the Silicon Valley market that make it a natural place for entrepreneurs:

Talent: First, it has great schools and companies. Talent graduates from Stanford, or leaves established companies like Google and Cisco, to create new companies.
Customers: Second, Silicon Valley has customers. Startups need early adopter customers to help perfect their product. For example, when WhatsApp built its new messenger software, it had access to friends at Facebook who helped influence the design. Cisco, Intel, Apple, Facebook, Siebel, Salesforce, etc are all down the street looking for new technology.
Investment: Third, Silicon Valley has risk capital. Investors in the Bay Area understand media, entertainment, and software. They understand the challenges inherent in early-stage investing. People they meet at cocktail parties, on the golf course, and school functions, etc are in and around the startup scene. Silicon Valley investors understand this market and are prepared to fund it.
Community: Fourth, they have proven entrepreneurs that want to “pay it forward.” Every startup runs into trouble. There were probably several instances when Facebook hit a wall, but there were proven entrepreneurs that coached Zuckerburg and steered him in the right direction. That sense of community, of entrepreneurs helping entrepreneurs, is critical to the long-term success of every startup.

Filling in the gaps

Here in St. Louis and the midwest generally, iSelect is focused on the “risk capital” pillar of this equation. But what about non-investors? What can they do to help?

If you run a business, consider becoming an early adopter customer. Think about it. If a startup came to your purchasing department today, would they ever get through your layers of bureaucracy in order to actually make a sale? Why not make it easier? Get to know your local entrepreneurs and be accessible to them when they approach your company.

If you know of any talented people who are thinking about starting a business, connect them to our regional incubators such as STLVentureWorks, the Center for Emerging Technologies, and BioSTL, among others. Encourage them to attend a local startup event. You can find a handy calendar of events here. There are many opportunities available to entrepreneurs; make sure you, your friends, your families, and your neighbors know about them.

Further, connect every successful entrepreneur with us at iSelect. We have talked with more than 700 firms in the last 18 months, and each one offers an opportunity for mentorship, guidance, connection, and leadership.

If you are not accredited, you probably know someone who is. iSelect makes it easier to invest in new ventures. We source deals, conduct more than 120 hours of diligence, and manage the investment. Investors can work with a financial advisor for guidance, and they can even invest through their IRA. Help connect us to more accredited investors.

Beyond capital

While not everyone is prepared to invest in startups today, we can all help entrepreneurs succeeded in different ways, large and small.

When folks like Bill Gates succeed, they create a plethora of jobs that may, in turn, come back and create opportunity for you. At scale, if every city works the way the network in Silicon Valley works, we benefit from growth across industries. While Silicon Valley is good at software, other cities are best for agriculture, animal health, logistics, retail, digital health, genomics, etc.

We at iSelect are ready to push this idea forward and are looking to expand our network to uncover early adopter customers, talent, and anyone else who might be interested in helping entrepreneurs—both here in Missouri and nationwide—succeed.

Consideration

With 2021 well underway and with public markets still strong, we think it is an important time to highlight some of the key private market, venture investment themes that iSelect fund has identified for the year. We believe technologies transforming the Agriculture, Food and Wellness markets will flourish, with a focus on four areas: technologies that enable better food choices to drive better health outcomes, technologies that drive better, more profitable farm operations, technologies that drive the Consumerization of Healthcare, and biome-based treatment technologies. At iSelect, we invest for impact AND performance. We offer qualified investors access to emerging growth companies through our national venture capital strategy. Our unique structure allows our investors to continue to invest in these companies as they develop.

Timing

Why is now the right time for venture? The answer is that now is not explicitly the right time. Venture is something we need in our economy at all times. Now is not better than any other particular time. The question is, why ever stop? When we look at the challenges we’re facing in food and healthcare the reality is there is someone, somewhere who has an insight about how to build a product that will solve those problems. And if they put the right resources to it, they will succeed. As long as we need new technology to make life better or make our lives more enjoyable, we need venture capital to help fuel those entrepreneurs.

What is iSelect as a product?

iSelect is a very unique product, but when you break it into its parts it’s fairly easy to understand. On the front end we’re a traditional venture capital fund. We have a diligence process. We have an investment process. We have categories of industries where we have focus and real expertise, and we invest in companies in those areas that meet requirements for the fund. On the back end we’re unique in that we don’t raise a large amount of capital at one time and deploy it over the life of our fund. Each deal that we bring onto the fund, our investors have to prove and determine to invest in that deal. We have to constantly prove our diligence standards. It’s accessible, transparent and easy for investors to come in and see our comprehensive process.

What is the ideal iSelect company?

We are looking for founders that are passionate and we want the problem they’re trying to solve to be big, real, and painful. We want the solution to be revolutionary and we want our capital to be able to help them solve that problem. We want to know that they have customers involved and that the solution they’ve come up with actually meets those customers’ and market needs. And we want the team to be capital efficient with the money they’re spending.

What does the ideal iSelect company look like?

We’re looking for a company that has an opportunity to have a 10x return to our investment or greater in a period of three to seven years. What excites us at iSelect are companies that are solving big problems. We want companies that are going to be the Monsantos of the future. Not just in the size and the scope, but the impact they have on people’s lives. We want to create positive impacts on people’s lives, so we invest in areas like agricultural production and areas like producing healthy foods for our kids. They are problems that impact real people’s lives on a daily basis. That’s what we’re trying to do at iSelect. We’re trying to solve the big problems out there. Find ways to bring capital to the entrepreneurs who are the real heroes out there getting up every morning, beating away at these things that are problems that you and me and everyone else faces in their everyday lives.

What is iSelect?

iSelect is a venture capital firm. What that means is we look at hundreds and hundreds of different companies and we apply tough diligence standards to each of them, looking at whether the team has a good plan for growing the business, whether the team is qualified and credible, and more. We do that to resolve the few who provide the best opportunities for investors. And then iSelect takes that smaller set of investments and goes to investors who are interested in venture capital and provides a way for them to invest in these companies, either individually or all at once. We co-invest alongside other venture capitalists. We source transactions through to an exit where the company would become public or get bought. And we manage that whole investment process on behalf of our investors.