A VC reveals the one thing a founder did to totally sweep investors off their feet — even before there was a real, functioning product

urban innovation fund vc

  • One of the primary functions of a venture capitalist's job is to spot the next big thing before it's demonstrated any traction. If it sounds hard, that's because it is.
  • Clara Brenner, a seed-stage investor, placed an early bet on Chariot, the mini-bus shuttle service that Ford later acquired for $65 million. She told Business Insider that Chariot's founder impressed her with one key move.
  • Before he had the capital to launch a shuttle service, he put ads on sandwich boards in San Francisco, rented a van, and started driving people to work. People loved it.
  • "We were just appalled and impressed by him at the same time," Brenner said. "He said what he was going to do, and he did it."

 

Clara Brenner is a pre-seed and seed-stage investor, which means the companies she typically looks at are so premature, they might not have a working product — let alone proof it has any traction.

So it's noteworthy that in 2014, Brenner placed an early bet on Chariot, the mini-bus shuttle service that Ford later acquired for $65 million, while the founder was still driving customers in a rented van and advertising on sandwich boards he placed in San Francisco.

Brenner is cofounder of a young venture firm called Urban Innovation Fund, which puts money into startups building the future of cities. She said Chariot's founder and former CEO Ali Vahabzadeh earned her investment before the company had any buzz, because he demonstrated momentum toward his goal every time they met.

"We met Ali, the founder of Chariot, through another company that had gone through our accelerator that was also in the transportation space. And they were like, 'He's crazy, he's awesome. You should just talk to him,'" Brenner told Business Insider.

"At the time, he didn't have anything. He was just like, 'I think we need a private van service in San Francisco.' And we said, 'OK, buddy, came back to us when you have something,'" she said.

That's when Vahabzadeh did something that made Brenner and her cofounder Julie Lein, who at the time ran a startup incubator that was backed by the Blackstone Group, want to put down their money.

"I want to say a week or two later, he came back and said, 'I rented a van. I've been driving it around the Marina'" — a ritzy and remote neighborhood of San Francisco — "'and people are just loving it,'" Brenner remembers Vahabzadeh telling them.

One of Brenner's friends was brave enough to ride with Vahabzadeh, a complete stranger, after spotting his ads in the Marina.

While it takes less than 20 minutes to ride in a car from the Marina to the city's downtown, commuters typically spend an hour sitting on buses and waiting for connections if they take public transit.

Riders, including Brenner's friend, took to social media to say how obsessed they were with Chariot's service.

"We were just appalled and impressed by him at the same time," Brenner said. "He said what he was going to do, and he did it."

"People loved it. He didn't even have an app or any technology to begin with. People were just appreciative of his time, his respectfulness, the cleanliness [of the vehicles], and the fact that it went where they wanted it to go," Brenner went on. "We were just really impressed that he clearly tapped into something."

When she's evaluating a company for a possible investment, Brenner said she considers how they like the founder and how customers enjoy using their products or services. But before a company earns its first dollar, she wants to see that it's making progress toward its long-term goals every time they meet.

"For us, it really is about a demonstration of momentum," Brenner said.

By the end of the year, Chariot added a second route and was doing about 2,000 rides per week. The company charged $4 a ride.

With more capital flowing in, Vahabzadeh added more rented vans to the fleet, hired drivers, secured parking, built a website, and started taking credit card payments through a smartphone app.

In 2015, Chariot reached a staggering 40,000 rides per month.

Chariot is Brenner's most successful investment to date. Ford bought the company for a rumored $65 million in 2016 and has shifted the business toward enterprise customers. In San Francisco, employees at Glassdoor, Sephora, and other major employers ride to work on pre-paid Chariot buses, according to Brenner.

Chariot continues to run public and private routes in San Francisco, as well as nine other major metropolitan areas across the US. 

SEE ALSO: A VC who just raised $22 million to invest in startups reveals one thing you should never say to a female investor

Join the conversation about this story »

NOW WATCH: This 50-lane holiday traffic jam in China will make you regret ever complaining about your commute



Contributer : Tech Insider https://ift.tt/2KqaqEe
A VC reveals the one thing a founder did to totally sweep investors off their feet — even before there was a real, functioning product A VC reveals the one thing a founder did to totally sweep investors off their feet — even before there was a real, functioning product Reviewed by mimisabreena on Friday, August 03, 2018 Rating: 5

No comments:

Sponsor

Powered by Blogger.