Clara Brenner (Tumml Accelerator) at Startup Grind 2016

TL;DR

Early-stage urban startups can raise seed funding by matching their strategy to the investors most likely to understand their market and stage. Clara Brenner explains how Tumml supported 33 companies that later raised about $40 million, with examples spanning AngelList, angel investors, grants, industry experts, and Kickstarter. Read on for concrete fundraising lessons from Hitch, HandUp, Neighborly, Valor Water Analytics, and The Town Kitchen.

Transcript

hey guys how are you doing it's the last Talk of the day uh my name is Clara rener I'm the co-founder and CEO of tummel tummel is uh an organization based here in San Francisco with the mission of empowering entrepreneurs to solve City problems and we do that by investing in really early stage businesses that we think have the potential to address ... Read More

Key Insights

• ✋ Seed funding is becoming the new Series A, and startups may need to raise multiple seed rounds due to higher expectations from series A investors.
• 🥅 Investors have different motivations, financial goals, and traction expectations, so startups should tailor their pitches accordingly.
• 🌱 Impact investors are difficult to find at the seed stage, and crowdfunding platforms may not attract grant funding without other capital sources.
• 🌥️ Startups should focus on target customers, demonstrate technical expertise, and showcase the potential for large-scale impact.
• 🤨 Relationships with investors and industry organizations can be valuable for networking and raising awareness about the startup.
• 😫 Startups should set realistic valuations by researching market comparables and seeking advice from industry experts or bankers.
• 🌱 Convertible debt or equity is commonly used for seed rounds to defer valuation discussions and prioritize execution.
• 🎏 Investors prefer startups with traction, passionate customers, repeat usage, and potential revenue streams.
• 🥺 Having a lead investor and solid unit economics can increase the attractiveness of a startup to investors.
• 😒 Startups should create a comprehensive list of potential investors, starting with at least 100 targets, and use platforms like AngelList for research.

Questions & Answers

Q: How can early-stage startups raise seed funding?

Startups should identify investors whose motivations, financial goals, and traction expectations fit the business, then tailor the pitch accordingly. Tumml portfolio companies raised early capital through approaches including AngelList, angel investors, grants, industry experts, and Kickstarter.

Q: What is Tumml Accelerator, and what support does it provide?

Tumml is a San Francisco organization co-founded by Clara Brenner to empower entrepreneurs to solve city problems. It invests in very early-stage businesses and also provides office space and mentorship, often supplying the first check or one of the first checks.

Q: What kinds of startups does Tumml invest in?

Tumml looks for startups addressing priorities identified by mayor’s offices that governments have not necessarily solved on their own. Its focus includes transportation, waste and resource management, homelessness, water planning, infrastructure, and job training.

Q: What seed-funding results had Tumml companies achieved?

About three years after Tumml started, it had worked with 33 companies. Those companies had gone on to raise about $40 million in follow-on seed funding.

Q: How did Hitch raise its seed round?

Hitch, a tech-enabled carpooling service, targeted a small number of high-profile investors and used the AngelList platform to fill out the rest of its round. It was later acquired by Lyft and became the backbone technology of Lyft Line.

Q: How did HandUp combine angel investment and grant funding?

HandUp, a crowdfunding platform for homeless people, assembled a round containing 17 angel investors, with Tumml as the only impact-oriented investor mentioned. It later received a $500,000 grant from Google, illustrating Brenner’s point that philanthropic organizations are usually not the first capital in the door.

Q: How did Neighborly and Valor Water Analytics find suitable early investors?

Neighborly received small early grants from the Knight Foundation and Sunlight Foundation to reach the proof-of-concept stage, then raised about $5.4 million in seed funding. Valor Water Analytics targeted water-resource and financial-planning experts who could readily understand its specialized big-data product for water utilities.

Q: How did The Town Kitchen fund its early development?

The Town Kitchen began with a Kickstarter campaign that raised $40,000, followed by a little funding from Tumml. The company employed low-income youth ages 18 to 24 in well-paying jobs with benefits while providing culinary training.

Summary & Key Takeaways

• Tummel empowers entrepreneurs to solve urban problems and invests in early stage businesses tackling core urban challenges.

• The company provides office space, mentorship, and funding to selected startups.

• Clara discusses case studies of Tummel companies in transportation, homelessness, water utilities, and job training, sharing their strategies for raising seed funding.