18 Aug An Ecosystem Where Start-Ups Help Other Start-Ups by John F. Wasik
Professors at Northwestern first helped Mr. Shah and Ms. Agarwal. And the founders “bootstrapped,” or self-funded, their enterprise during the recession.
“In 2008-2009, we slowed down,” Ms. Agarwal said, “so we had to reconnect to our journey, which was our passion for changing health care.” With the Jumpstart fund, she says she now wants to “pay it forward” to other entrepreneurs.
These support systems need to be diverse to be effective, though. According to the World Economic Forum, which surveyed more than a thousand entrepreneurs around the world, what start-ups value most are accessible markets, funding, regulatory framework, an educated work force and major universities. That doesn’t mean, however, that the network always provides robust financial backing from big-money players like large venture capital firms.
An ecosystem also offers social and psychological support. What fuels entrepreneurial success, Ms. Agarwal noted, are passion and purpose. When she started her company, she wanted an enterprise that would have a positive social and personal impact. She started with diabetes education, a disease that affected both her and Mr. Shah’s relatives in India.
When Ms. Agarwal interviews candidates for the Jumpstart Ventures portfolio, she wants to find like-minded people who are “passionate about their mission.”
Mert Iseri, co-founder and chief executive of SwipeSense, a company focused on reducing hospital infections, was someone who fit the bill. Also a former Northwestern student, he met Ms. Agarwal in 2012.
Mr. Iseri, 28, was focused on providing a digital hand hygiene solution to combat the 100,000 annual deaths in the United States from hospital-acquired infections. Such infections cost $28 billion a year in related health care expenses.
“Shradha became our first investor and gave us our first check for $25,000 and employed ‘radical candor,’” in her mentoring, Mr. Iseri said. That included discussions about tough decisions that had to be made when building a business, such as hiring, firing and determining long-term goals.
“It is always difficult to fire someone,” Mr. Iseri said. He described one situation where a sales representative was a high performer but didn’t fit the culture at SwipeSense. “Shradha was very clear; her direct feedback was to part ways right then and there, and she highlighted that no amount of short-term results can justify holding on to folks who won’t be long-term members of the team.”
SwipeSense’s initial presentation at Healthbox, a Chicago-based incubator, raised $1 million in 2011 after one of its first demonstrations. Mr. Iseri credited Ms. Agarwal’s continuing support with helping his company secure more than $12 million through several rounds of financing.
Mr. Iseri would not disclose his company’s sales but said it had “annual revenues in the seven figures” and was “experiencing significant month-over-month growth” with its customers.
Ms. Agarwal, her employees, co-investors and angel investors have also bolstered entrepreneurs by simply being nearby and giving direct guidance.
For instance, ContextMedia provided office space to Packback, which offers online learning communities and digital textbooks for college students. Ms. Agarwal and ContextMedia employees often interacted with the firm’s workers to offer advice.
“We’ve been in seven office spaces since we were founded four years ago,” said Jessica Tenuta, a co-founder and head of design of Packback. “Shradha showed us how to hire and incorporate our values while mentoring us. We made great connections while being in their space.”
Packback now has 24 employees and a $250,000 investment from Mark Cuban, who took a 20 percent stake in the company after the co-founders presented on the reality show “Shark Tank” two years ago.
Ms. Tenuta and Packback’s co-founders — Kasey Gandham, Nick Currier and Mike Shannon — have also garnered support in other ways. The company works with 1871, a business incubator in Chicago that offers classes, co-working spaces and access to venture capitalists.
Ms. Tenuta did not disclose her company’s sales revenue but said the firm expects to have 30,000 students using Packback in the 2016-17 school year, up from 10,000 students in the previous year.
For their part, Mr. Iseri and Ms. Tenuta were inspired by their experiences to mentor other start-ups. These may be at university-based or private incubators and accelerators, in co-working environments or through other angel investors and venture capitalists.
Ms. Agarwal characterized the payoff as “the communal support through learning, wellness and volunteer opportunities.”
She added that her enterprise and those she backs have “a bias toward action and scaling to the market.” That means an entrepreneur’s vision must eventually translate into revenues, profit, growth and a commitment to giving back to the community and other entrepreneurs.
The network of support offered by start-up ecosystems, though, won’t get entrepreneurs entirely past the fear of failure and rejection. A plunge into the unknown is part of making it past those perilous first years.
“When I was a girl, my mother pushed me into the deep end of a pool to get me to swim,” recalled Ms. Agarwal, who grew up in India. “She said it was the only way to learn. She was one of four daughters in her family, all of whom were pushed to earn college degrees by my grandmother.”
If Ms. Agarwal and her peers succeed, their companies will also contribute to social good such as better medical education and improved health outcomes.
They will, in her words, be “solving problems worth solving.”
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