Where angels fear to tread

I don’t think of myself as a female founder, just like I don’t think of myself as a tall founder, a blonde founder, a GenX founder, or a German founder — although all of these are accurate descriptions of me, too. I am just a person with a passion informed by experience, which compelled me to become an entrepreneur.

Founding a tech company was incidental to my purpose in life, to the change I am trying to help make in the world. I left what many would consider a cushy position as an executive in a non-profit organization to lead the spin-out of an enterprise we had been incubating there: a next generation peer-to-peer platform for accelerating the pace of change, by making it easier for people and organizations in our industry to discover what’s already working, collaborate on adapting solutions to new contexts, measuring their impact, and financing them at scale. Like so many entrepreneurs before me and around me, I find myself at the helm of a company, Sphaera, that solves problems I had been experiencing first-hand over 15 years working in my profession.

We were lucky to have had ample grant funding during the “skunk works” phase of our endeavor, and my life experience taught me confidence in my ability to learn what I needed to know to run the enterprise SaaS company that Sphaera wanted to be. As with anyone who’s spent a significant amounts of time in any industry, I have robust networks and was able to assemble a great team of colleagues, partners, and advisers to inform everything from product to legal structure, from strategy to the all-important fundraising when it came time to seek a round of growth capital.

Portland is, in many ways, not an obvious place to raise equity capital into a for-purpose tech company that has a large, but to many unfamiliar, global market. We work with the multi-lateral institutions, private foundations, civil society organizations, and other “change makers” on the way they do their business, which for most people simply shows up as organizations they donate to once a year. Nonetheless, I had heard good things about the affability of the local investor scene, and began reaching out to individuals and funds — heeding the universal adage that “if you want money, ask for advice; if you want advice, ask for money”.

Pretty quickly a pattern emerged: there are great VCs in town who are generous with their time, thoughtful in their analysis, and genuinely interested to learn about a business that doesn’t fit neatly into familiar boxes. Across the board, their recommendation was: (1) come back when you have removed the complexity of your enterprise formation (remember, we’re emerging out of a non-profit corporation); (2) when you can show $1M+ in revenues; and (3) talk to the local angels, who would be more appropriate for the stage you’re at.

Intutitively, it makes sense that angels, as earlier stage investors, would be able to deal with the characteristics of our business: the long and bumpy sales cycles of enterprise Software-as-a-Service that force you to think and plan in terms of annual, not monthly recurring revenues; a legal structure that anchors the social mission your market demands; the emphasis on customer education, onboarding, and success that percolates through financial projections, and so on. In reality, not so much. I came away from those meetings mostly perplexed: the questions were superficial and somewhat rote — had I considered hiring a CFO who could draw a hockey stick? How could I possibly be motivated if I don’t have equity? And didn’t I think our payroll was a little too rich? The thing is, you can’t have a market transforming, high growth company powered by deep industry knowledge that’s run by a bunch of 21-year olds subsisting on ramen.

Not surprisingly, I got tired of making the local angel rounds, and instead focused on a revenue-driven growth strategy while we deepened our conversations and relationships with a group of (international) investors who are more aligned with our purpose. Along the way, however, I started meeting other entrepreneurs who had similar experiences — from answering questions that didn’t match our businesses, to being invited to this or that pitch competition “because we want to feature more women”. We started comparing notes, and guess what: all our businesses were at similar stages, had similar needs, and encountered similar incomprehension among local investors. So we banded together and started creating the financing vehicle that would be useful to others like us — the XXcelerate Fund.

And this is what gives me hope about my hometown: Portland’s maker spirit extends to the community of entrepreneurs, who will just make a new kind of capital resource, when the old model doesn’t work for us. Along the way we’ll create what we most need to succeed: a group of peers to hold each other accountable and check our BS; a learning community to efficiently fill any gaps in skills we need to run our companies; and a source of flexible capital that gets us to the next level.

Thank you bryanlehrer for comments on an earlier draft.