Short answer: PenPath will not be part of the Capital Innovators Fall class. If you’d like to know more, read on…
I’ll refresh you on what the situation was for those who aren’t completely aware. Earlier this summer I started my second business called PenPath, find out more about my business here.
PenPath has had a lot of success so far. We’ve gotten the attention of very talented people to help build it, have a list of big supporters, users are emailing me telling me they can’t wait for the release, and investors are wanting me to pitch the idea to them. These are all signs of a business with a lot of potential.
One of the goals for PenPath was to get in a business incubator where we could receive seed funding, resources and exposure. We applied to be part of a Saint Louis incubator called Capital Innovators (CI). From the beginning, things seemed very promising. Media outlets wrote about us applying (see St. Louis Business Journal article about us here), people in the community saw us as one of the businesses with the best shot at winning. Our splash page looked great and created positive brand reputation. I felt we had a chance at winning and kept spending ridiculous amounts of time preparing.
There were three rounds of cuts in the program. The first was a written submission where 85% of 133 applicants were cut down to 20. Then there was the in-person interview round where those 20 were cut down to 12 finalists. PenPath made it to the finals.
The final round was a presentation in a room full of investors and business people hand picked by CI to help them decide which startups looked most promising. They would hear all the pitches and rank them 1-12.
Before my final presentation, I had coffee with one of the two people that make the final decision for CI, his name is Hal, a well recognized business man out of STL. I have nothing but great things to say about him. He was really nice and supportive (as with everyone involved with Capital Innovators). We spoke for a solid hour — talked about my business and Hal explained to me how the final round would work. I distinctly remember him saying, “The investors help us decide who wins, but the final call is up to Judy and I” (Judy is the CEO of CI).
These decisions aren’t easy. Hal and Judy spend $250K (50K on 5 startups) twice a year and have to guess which businesses are going to succeed and payout — CI takes equity in each business. If the businesses die, there goes 50K and a lot of time and effort.
I patiently waited after my final pitch. One week went by, then two, then three. I knew at any moment they would get back to me. Meanwhile family and friends were as anxious as I was. They kept asking if I knew anything yet. I kept saying, “nothing yet…” We were all on the edge of our seats.
Finally, while I was at a work-outing playing demolition ball on Monday evening, I noticed I had a missed call. I knew at that moment that voicemail was about to tell me if I would finally be able to change my entire life to pursue my dream.
I stepped away from my co-workers to listen. Sure enough, it was a message from Judy. Here’s what she said:
Hey Alex, it’s Judy from Capital Innovators. I’m going to leave you a little bit of a lengthy message – I don’t really want to leave this on a machine, on the other hand I don’t want to be all cryptic… I wanted to let you know that you did not make it into our fall class, but I wanted to give you as much feedback as I could as to why that is, and the basic story is that everybody really gave you high marks as a founder. Everybody really liked you and thought you were very sharp. They are a little bit concerned about building a marketplace. We’ve invested in a couple of marketplaces already and not to say that they won’t be successful but those haven’t been our best performers so it has us a little reluctant to move forward with an investment in another one. That’s not to say that you don’t have a fantastic business idea. We had over 133 applicants and you were in the top 12 so I think that speaks very highly about your business model and I strongly encourage you to pursue it.Judy
So that’s that. I will go into depression and forget about PenPath. It’s time to give up.
Kidding… No, it’s definitely a bummer. Stressful? Yes. Frustrating? Yep. Disheartening? NO. What about the over 100 writers who have already signed up to use PenPath when it’s released? Or the investors who think this business has promise? I can’t give up. I’m not going to let this stop PenPath because in life you don’t know what other opportunities lie ahead. PenPath has a lot of promise to help writers all over the world.
CI was afraid that I would need both publishers and writers for this business to work. The thing is, the service is made for writers track how well they write and how influential their work is. The service works without publishers. The marketplace is secondary. I own a popular publication and know how valuable it would be to find writers using PenPath. I also have a few publications signed up to use it as soon as we launch. The business model works without the worry they had. No reason to argue it — only note to address this in the future and make it more clear. It’s up to me as CEO to prove it and sell it.
So what’s next?
I need to tell the investors who want to be a part of PenPath what happened, many of which will read this post. Sitting down with them and working a deal so I can keep my developers paid. We could also apply to other business incubators. Nothing has changed and things will keep progressing. It’s part of business — it’s part of life. I have an amazing support group of friends and family behind me which make dealing with these setbacks much easier. You know who you are, and I really appreciate it. The journey is half the fun.
This is my new blog by the way. I’ll be posting my thoughts, business lessons, and things I find really interesting and important. Check back every now and then.