Purpose: Equitable Capital Access

On this episode, Brenda speaks about purpose with Allison Byers, founder of Scroobious,  a tech company  driving innovation to equitable capital access by removing barriers to partnership among diverse founders, investors, and service providers.

Scroobious is a platform that is working toward equitable capital access: In Allison’s words “ fair representation of all segments with the exclusion of none”  - now into its fourth year –  having served over 900 founders. 

“Finding the funding and the people are critical to early stage success of a company.“ Listen to Allison’s personal story of Scroobius and how her  relationships that go back 20 years ago and an introduction to the newly appointed President and COO of Scroobiuos. 

 

You can find out more about Allison, Scroobious, and other resources mentioned in this podcast at:

https://www.linkedin.com/in/allison-byers/

https://www.scroobious.com/

For founders working on a pitch:
Scroobious is dedicated to empowering founders for successful fundraising. Our platform provides invaluable resources including online learning modules featuring investor-vetted content, personalized pitch feedback, tailored pitch practice sessions, access to a vibrant community of hundreds of diverse founders, and connections with investors. Click here to apply for a sponsored (free!) account. You can also join our Lite plan for just $1 to access our community, events, and curated resources immediately.

For early-stage investors:
Scroobious connects you to a network of brilliant and diverse founders solving important problems. These founders have worked with us to clarify their story, showcasing comprehensive pitch material and coachability.

Click here for a quick platform demo.

Visit this website, register, and then use promo code EARLYINV for a free 6-month trial at the Stripe checkout page. After the trial, it's $10 per month (cancel anytime). Complete brief onboarding questions to enter the portal and start messaging founders!

https://www.newswire.com/news/scroobious-scales-up-to-meet-the-urgent-call-to-support-diverse-22415543

additional content here :

https://www.gov.ca.gov/wp-content/uploads/2023/10/SB-54-SIGN-MSG.pdf

 

Transcript:

00:04
Hi, I'm pleased to announce something very special to me, a new subscription-based service through Next Act Advisors that allows members exclusive access to personal industry insights and bespoke

00:32
corporate governance knowledge. This comes in the form of blogs, personal book recommendations, and early access to the founder's sandbox podcast episodes before they released to the public. If you want more white glove information on building your startup with information like what was in today's episode, sign up with the link in the show notes to enjoy being a special member of Next Act Advisors.

01:01
As a thank you to Founders Sandbox listeners, you can use code SANDBOX25 at checkout to enjoy 25% off your membership costs. Thank you.

01:19
Welcome back to the Founder's Sandbox. I am Brenda McCabe, your host. I'm delighted that we're now into the third season of this monthly podcast that reaches entrepreneurs, business owners, and corporate board directors, and VCs. All interested in building resilient, scalable, purpose-driven businesses with an undergirding aspect of great corporate governance.

01:45
I admission, my mission at NextAct Advisors, which is my consulting firm, is really simple. It's just building the scalable, well-governed and resilient businesses. My guests to the podcast are themselves founders, business owners, corporate directors, professional service providers who like me want to use the power of the private enterprise, small, medium or large to make change for a better world. With each of my guests, we go through some storytelling.

02:13
about their origin stories. And we will touch on topics around resiliency, purpose-driven enterprises and sustainable growth. And again, my goal is to provide a fun environment in this sandbox where we can equip one startup founder at a time to build a better world through great corporate governance. Today, my guest is Alison Byers. I'm absolutely delighted that she's joining me all the way from Boston.

02:41
Allison is joining and she wears many hats, but she is going to talk a lot today about her founder journey of Scroobius. And it is a very unique platform that unlike other platforms in the ecosystem used by startups, this is one that has a purpose to improve equitable capital access by providing pitch education for founders while making connections with investors.

03:11
to put unused capital to work. And we're gonna hear more as we get into the podcast. I like to have guests that are also very mission-driven as mission-driven as I. And you are, Alison, unequivocally mission-driven in your purpose after you yourself encountered gender bias firsthand while you were fundraising. So I think it'd be appropriate

03:40
story to start telling now. So thank you for joining me, Allison. Yeah, well, thank you so much for having me, Brenda. And absolutely love being so aligned in our missions and being able to talk about how we can use business elements to accomplish the mission-driven motives that we have. So.

04:02
Yeah, I'm happy to share my origin story for Scroobious. And we're a four-year-old company, so I incorporated in January of 2020, which maybe we'll hit on later what it means to incorporate right before a global pandemic. The initiative started after I, as you said, experienced pretty extreme gender bias myself.

04:26
So before Scroobious, I joined scientific co-founders and launched a medical device company out of MIT in a hospital system here in Boston. And I was the business one on the team and did all the things from incorporation through our fundraising. And we did raise almost $10 million at that company going through a series A prime. And then I really struggled to raise our series B. So we ended up going to early acquisition. And

04:52
I didn't know any of the things that I know now. I was not in this space before then. And Medical  device is a pretty specific industry with pretty specific investors. So you're kind of in that world. But we were acquired in an asset sale. The people that acquired us were men. And not too long after, raised $55 million. And not. Yes.

05:21
Every time I share that, there's eyes open. A multiple of what? 10? Yeah. And it was very clear to me that the one thing I could point to that was different was my gender. And I was co-running the company with another woman. So we were two women out there doing this, and one more woman involved in the company. But it's.

05:48
it set me on a path of trying to understand what happened. And so that's when I researched the field of capital allocation and investing in pitching first just to understand how I could have failed so badly. That's the internalization that many founders have when they're unable to raise the capital your company needs. And very quickly found all the data that I know you're very familiar with. But for those who are listening who maybe aren't,

06:17
Nationally, 1.8% of venture dollars go to women-founded companies. And in my state of Massachusetts, that number is 0.9%. We're also ranked one of the worst states, 47th, for supporting women-owned businesses. And once you learn that, as devastating as it is, it also releases that internalization of failure. Because you say, oh, I didn't actually fail. I just did not know.

06:45
that I was operating in a system that's designed to keep me marginalized. I was not likely to raise that money regardless of how well we were operating the company or how strong our fundraising pitch was. Okay. So that's my origin story for wanting to dedicate my professional career to working toward more equitable access to business capital. And it's not solely focused on women owned companies, is it? Exactly.

07:15
Yeah. So tell us a bit more about Scroobious and starting a company. And right when the pandemic, you know, set in here in the United States and we locked it went into lockdown. So, right. Yes. So I did at least a year of research before deciding.

07:33
what I wanted to do was meant to be a for-profit company structure. I didn't rush into it. That's not my nature. Did my full market analysis and primary and secondary research, thought about our own capitalization plan, then decided to incorporate in January of 2020. So, impeccable timing. But I know we'll talk about that a little later too in terms of how do you handle what

08:02
startups throw at you and building without the ability to predict how your business might fluctuate or how the macro economy might fluctuate around you. But no, we don't focus only on women. That's of course my lived experience. But when I researched it, pretty much any segment where founders identify as underrepresented in some way, receives incredibly inequitable distribution of.

08:31
business and growth capital. If you look at it by gender or race, that's true. If you look at it by geography or by sexual orientation or military veteran status, neurodiversity, there's a lot of different ways that people can identify as underrepresented. And we don't define that for somebody. Nor do we exclude anyone from our platform because we're really working toward equitable distribution which means

09:00
true representation of all segments to the exclusion of none. So, yeah. I love it. Can you say that again? That's a great tagline. So you're working towards? So we're working toward equitable distribution, which means fair representation of all segments to the exclusion of none. Fantastic. Yeah. So we've got white dudes in there too, right? Like we're not turning people away.

09:27
But our own go to market strategy was to and is still to partner with organizations that are diversity first as well, so that we're building the community that represents what should be equitably represented based on our population.

09:45
So let's go into the actual platform itself. It is a platform, right? Yeah. You've got founders on one side receiving pitch education and you have more, and you have investors on the other side. So how does a founder experience Scroobius? Yes, great question. And we are definitely a platform and we actually have three key stakeholders. So there's some marketplace elements with the founders and investors on two sides,

10:15
What we've come to discover, and this is part of the building and pivoting and resiliency of a startup, is that true understanding of how important relationships are in accessing resources and capital. This is not a transactional industry. And so the third key stakeholder here are service providers and program partners. They are very underutilized.

10:44
in this space and they are key connection nodes. And so we are a true platform with all three at the center there. But for founders, to answer your question, yes, we're a scalable platform. We were designed intentionally to scale because with all three of those stakeholder groups, they number in the millions. This is a huge market. And so

11:08
Founders enter our platform and immediately they can access our flagship program called the Pitch It Plan, which is full of micro lessons online, asynchronous access, about everything to do with fundraising strategy and pitching and building those relationships with investors because that type of quality education written from an authentic perspective of understanding that it is different.

11:37
for underrepresented groups and making it accessible and understandable for everyone is not easy to access. It's not freely out there. So your labor of love, for lack of another word, you've curated that and probably through your professional service providers, how did you curate that specifically for underrepresented? So it's all...

12:03
created by us. This is proprietary education, and we do work with providers. In addition to our custom material that we add to all the time based on the needs of our community, we also host workshops twice a month with industry experts on all kinds of topics related to early startup building. Apologies, I do have a cold today, so I'm going to lose my voice every so often. Yes, just.

12:31
But it's based on hundreds of interviews with investors, hundreds of interviews with founders, and personal experience of myself and others on the team to really create different material that speaks to the heart of what founders want to know. So for an example, we have a lesson on how do you give a 10-minute pitch? How do you give a five-minute pitch? How do you give a three-minute

12:57
What if you have a one minute pitch? What exactly goes in there? And we provide the insight into why it is important to an investor. So they get both the lesson and the understanding of why does this matter to do it this way. So they have access to that. And alongside it, they can upload draft material and get personalized feedback from our trained reviewers. So it's a combination of online learning

13:27
Again, that asynchronous scalable human delivered feedback that founders really do need to feel comfortable and confident. Once they have worked through our program, they have the ability to share their pitch and their profile with the investors, right? So that they can get in front of our network of...

13:50
vetted and active angel investors who are specifically looking to diversify how they find opportunities so they can put their capital toward the founders they're looking for, even if they are not in their geography or not in their known network or affinity groups. Is it national? United States actually? We're actually international now. We have founders all over the place. Yes, our community has grown. We've worked with over 900 founders now in basically four years.

14:19
Yeah. Wow. Excellent. And how does the investor then experience it? So are they actually contacted by the founder? Or can they just peruse Scroobius platform, identify opportunities that fit within their investment thesis? How does that work? Yeah. So it's a great question. And again, we've built a differentiated platform by listening to what.

14:48
investors want and we focus on angel investors. We're pretty specifically finding those who are more likely to write checks to our founder base to underrepresented founders and angel investors represent an enormous untapped opportunity. So when they join our platform they do give us some information when they on board about their thesis and what they're looking for and then.

15:11
They can see all of the founders who have uploaded their material, which includes both a comprehensive deck, because we QA what goes up there, and a short video introduction. So they can see the human behind the deck. And that is really core to how we curate for investors what they see. We are measuring variables both about the business and about the founder.

15:36
and constantly learning from the investors as they engage with different pitches, what are they actually drawn to? So that's the AI behind this is building an engine that's a little bit like Netflix, where it's constantly learning based on what you watch and suggesting other things you might like, right? Based on your behaviors, we're incorporating that based on your behaviors. Here are other founders that you might like.

16:05
And so you can log in and get a very customized experience. We also heard pretty loud and clear from angel investors that there's a variety of reasons why they might like to keep their anonymity and not be on a list or have founders reaching out to them constantly. And so they do. They make the first outreach to the founder and they can make that outreach anonymously if they want.

16:29
So they can open a founder's pitch material and ask questions within it, either with their name attached or anonymously, the founder still needs that feedback, still needs that connection. And then they can choose to reveal their name later on. If this seems like someone you want to get to know better. So that's in the investors control. Yeah, totally in the investors control. Interesting, interesting. And it's asynchronous. So if the investor were to ask any questions, then the

16:57
founder does see those and can answer. Yep. Everyone gets an email. They can answer in the platform. They can answer via email. You can have a whole conversation about a slide in a pitch deck in that slide to, again, make efficient use of everybody's time and decide, is this worth a 45-minute call after you can get through some of that conversation? Excellent. So you did share. I wanted to get into some of the metrics that there have been.

17:26
900 founders already experiencing Scroobiouss. What about investors? Because I had an interview just some time back. It dropped this month with Marsha Dawood. Oh, yeah. And she has her podcast, The Angel Next Door, and her new book has just released. I asked her, how many angel investors are actually in presently United States? There's only 300,000. I mean, if you think about that, we are a small group of.

17:55
angels and her mission with the book is to increase the number of people that become angel investors. So like back to you and there are funds of course. Yeah. Yeah. I know I was just with Marsha the past two days contributing to the Angel Capital Association Women Investors Forum and I got her book yesterday. I'm very excited to read it. So yes, and that I will

18:24
representative of the potential for angels that could be actively investing. And it's also very difficult to measure. There is not a good comprehensive set of data on angel investing activity because it does not have to be reported. So you can't scrape it. So personally, I believe that number to be much higher in reality.

18:52
And there also is, I think it's $32 billion in unallocated capital based on inactivity of angel group members. Wow. There are members who are part of that group, but not investing through the group. And that was pretty key in my research as well. To put this capital to work, it means they're not finding the people they want to put their money behind. So 32 billion in dry powder would be the word, right? Yeah, basically. Yeah, that we know of.

19:21
That's of angel group members and not every angel is a member of a group. Right. Right. So, yeah. So in terms of our own investor platform, we launched it last year in twenty twenty three and we've been working on a somewhat invitation basis. Although we do make it open to anybody to join. But we're really looking to have people who actively write checks to those who identify as underrepresented as part of our platform or those who are.

19:49
active investors in looking to start establishing those relationships. Again, we're not transactional. We don't affect the investment through our platform, but we are looking to make more of those connections. We're the infrastructure that allows investors and founders to find each other. I think it's around 40 or 45 active angels in there. We have...

20:15
multiple financings that have happened by discovery on our platform. And it really hasn't been that long a period of time. I know. And in a tough market, very tough market. Yeah, in a tough market. Although again, an angel is an entirely different investor than a fund manager. And where fund managers might go stagnant, angels don't necessarily do that. Excellent. And in the show notes, there will be links, Alison, to Scroobius.

20:45
as well as some other materials you've provided. In addition to your day job, right? You're now into your fourth year of running Scroobius. You also have been a catalyst for change and you have co-authored the California Senate Bill 54 that was signed into law in October, 2023. What's this bill about, Allison?

21:13
I got excited last year when I saw this and I got a lot of phone calls from VCs saying I need women. I need underrepresented found companies. Well, I'm very glad it already catalyzed calls to you and awareness of this. But no, I'm extremely proud to have participated in this and Scroobius is my company and we're making demonstrable change and growing quickly. But yes, I do also a number of other advocacy efforts.

21:42
Again, it's dedicating myself toward working to equitable access. And policy is something my own company needs and other companies in my space because this is unregulated territory for the most part when it comes to trying to move the numbers on at least venture allocation of capital. Again, different than angels. So the bill deals with venture allocation.

22:08
But it will require venture funds to publicly report diversity metrics about their prior year's investments. It is a California bill, but California is responsible for over 30% of investing activity and this will have a global, was it 30 or 60? I might have mixed up that stat. I'm so sorry. But...

22:32
It will have a global impact because it is about having a nexus in California, which could mean you invested in a company with a nexus in California, but your fund is located elsewhere. You will still need to report. And so nexus is defined in the bill. I've actually read it. And it comes into effect in 2027, or is it immediate?

22:53
So reporting requirements. Yeah, they're working through the implementation of it now. It was signed into law in the last year, and there's a whole lot of things that need to happen before this is implemented and enforced. But there are a number of efforts, especially in the private industry, that are already helping funds figure out how to make this the most efficient that they can. And it's information they're collecting anyway.

23:21
This is a data collection bill. It's to establish that baseline of where are the dollars going? So we have accurate data and they have it, they're just not reporting it. So now it will be available to anybody who wants to go see and have an enormous positive impact on future policy, but also on entrepreneurs and how they spend their time because it is not

23:46
transparent to any entrepreneur now, unless they're going to scour every website of every fund and then look up the leadership to know, does a fund write checks to women? Is it worth my time to go do that? So this is not telling anyone where they must invest their money. It isn't dictating that at all. It's just saying, we need a baseline of accurate quality data.

24:12
Because to date, all those numbers we cite, even the ones that I quote, they're from private companies. They're from Pitchbook and Crunchbase. And there's data flaws with their collection as well. Absolutely. And did you pick off California, start with California because of the sheer presence in the ecosystem? Because you're also championing initiatives in other states.

24:41
like the Massachusetts Senate Bill 978 and New York Senate Bill 809786. Yes, there were a lot of strategic reasons for California to start, although it's interesting.

24:59
work on Massachusetts legislation in this space predated the work in California. And we started by working with what we have been pursuing and are still pursuing in Massachusetts over there, over in California. It shifted to a different type of bill for a variety of reasons. I have learned a whole lot about this process in co-authoring that bill. But there's so much that goes with getting policy.

25:27
A lot of it again is people oriented, relationship oriented. California was a, we were there at the right time in the right place with the right people to push that through. I love it. We're going to switch gears a little bit here. And you made an important announcement in the past couple of days. Congratulations on the appointment of president and COO Ralph Gross III.

25:57
Thank you. He's joined you at Scroobius. And if you see the announcement on LinkedIn, it goes into detail about how relationships are important. So you've mentioned, you've touched on relationships several times, right? When you're an entrepreneur, you are an entrepreneur, you founded Scroobius, right? Can you share how relationships matter when building your business? That's the

26:27
And now that you have a COO and president, how's your day job gonna change? All right? Thank you. Yes. Well, I mean, we're now really the perfect example of why a platform like Scroobious and ours in particular needs to exist because it is relationship driven. And people will say everything in business is relationship driven, but there's plenty of transactions that happen and finding the funding.

26:56
And the people are critical to early stage success of a company. It's very different at the early stage. And for our story, I was introduced to Ralph three years ago by a woman who's on our advisory board, who I had actually met nearly 20 years ago when I won a scholarship from her as an MBA student. And he became one of our very first investors. He has an

27:24
exceptional career in large financial institutions and investment banks. But earlier on, he did attempt to start his own company. And it was very similar to what Robin Hood ended up being. But as a black man, he really couldn't raise the funds that he needed. So he experienced that bias as well when he was attempting to go the entrepreneurship route. And it's always stuck deep with him. Right. So he has a

27:51
very strong resonance with what we're building and our mission and firsthand experience, right? That authentic lived experience is something you cannot replicate and the connection with your stakeholders. We both have them. We both have them from the entrepreneur's perspective. And we both have them from an investor perspective. I'm an angel investor as well. And clearly, so is he. But we've developed our relationship over the three years of him being

28:18
of our team as an investor on my cap table. And very recently, he made the intentional decision to leave that corporate career and join us as our as leadership as our president and COO. So we'll be working very closely together as CEO and COO. And it accompanied a $500,000 investment into the company. So we have capital we need to really grow. This is a game changer.

28:48
for the trajectory of Scroobious, both from a capital perspective and a leadership perspective. Amazing, amazing. So I wanted to bring us back to the Founders sandbox and my guest. And again, you're very mission-driven, Allison. And I always like to ask my guests what the meaning is of three.

29:17
kind of terms that I use when I'm working with my clients. And those are resilience, purpose-driven, and scalable slash sustainable. But what does resilience mean to you? Please. So resilience is somewhat similar to me when people talk about grit. It's the quality of taking.

29:44
an unexpected circumstance and figuring out how you utilize that and move forward. And so for me, an easy example is that a month into my company building, we were in a global pandemic. I have two young children who all of a sudden had no school to go to, and all the things that life throws at you. I immediately had to decide, do I close the company down right away?

30:14
Or do I figure out a way to keep doing this? And so when I think about being resilient, there's a lot of elements to that. But that for me was, OK, I'm going to take it, and I'm just going to modify how I build this company. Because it's too important to just close it, and I'm too dedicated to it. And it really did impact our own growth. I was going to go raise a big round. That was my plan. Go do what I did before and start raising. I'm building a scalable venture backable company.

30:43
And immediately I had to say, nope, that's not what I can do anymore. So what do I do? How do I build slower? How do I make this a reality based on the circumstances that have been dealt to me? And we really turned it into a positive for how we've grown. And you did the data gathering. And also really just I love that

31:11
My guests share a personal experience, but personal slash professional, right? And that is an exceptional example of starting a company, incorporating it in the pandemic after experiencing the gender bias in your own previously venture-backed company. So amazing, amazing. What about purpose-driven enterprise? What does that mean to you?

31:40
Each guest has a different, this is kind of my favorite part other than your origin stories. I love it. It's really interesting. The word purpose to me is very interesting because I do a lot of speaking about social entrepreneurship and impact entrepreneurship, but purpose is a little bit different for me. It doesn't have to mean that you're an impact oriented company, but it reminded me of

32:11
guidance that we give our founders is something you need to be attuned to is as you're talking about your company and as you're pitching for the thousand and eighty second time, if you don't naturally get very excited about what you're talking about, that's a warning signal for yourself that you might have lost some of your purpose. Okay. It doesn't really matter what you're building, but as the founder,

32:40
you have to have a direct tie to the purpose of why you're building what you're building or your company is at risk of crumbling because as the leader, if you lose that, where is the North Star for everybody else? Excellent. And you often mentioned the word authenticity during this podcast today. And I think that, forgive me for

33:07
putting words in your mouth, but if a founder is authentic in sharing what that purpose was when creating the company, is don't lose that North Star. Thank you. Absolutely. You know, there's too many stories of companies receiving large amounts of funding and burning it and having to close. And there's too many founders that just want to be a successful founder, which is not.

33:34
it doesn't have that authenticity that you're talking about. And right, the other side of that is having the lived experience to be authentic with those who you are servicing with your company. And I mentioned it before, but again, that's when investors talk about a moat, which some of that lingo is so annoying to founders, but that's a moat, you can't replicate that.

34:00
You can't replicate someone's lived experience. And we're seeing that right now with some backlash in FemTech funding, where more FemTech funding is going to men than to women. They can never have that lived experience. It doesn't matter how close to a woman they are. They can't. And that is not ever going to be as authentically received by customers as somebody who shares that lived experience. Amen, sister.

34:29
Yes, I am co-leading with the TiE SoCal chapter. It's an entrepreneurial membership organization, a competition of women-led companies. We're in our third year, very large cohort, that's in semi finals and independent judges, male and female. It's amazing the energy. And we've talked about nails. We talked about an air purifying machine. The gamut of

34:59
you know, feminine or women-led companies was amazing. And just, we have a second session today. Yeah. And that's, you know, that's something that I talk a lot about and I try to get this message through because it's not something that people always communicate, but you know, the lack of funding to women, to black founders, to any, to take your pick of underepresentation.  For women, it is not just a women's problem.

35:28
We're not just building companies only for women. This is an everybody problem. We are building companies addressing enormous societal needs. And without our contributions to that innovation and to that problem solving, every single person is suffering, not just women. Thank you, Allison. Other term, scalable growth. What's that mean to you? Scalable.

35:58
Um, so scalable means that you are building something that is intentionally designed to reach many, many people and that you are doing it in a way where you can effectively sustain that growth, sustain that scale. Right.

36:21
and there are businesses that are made to be scalable. Scroobious is made to be scalable and there are businesses that are not and both are completely needed and fine, but there is a distinction. And if you are not building something scalable, you're probably not right for the venture capital funding model of how you capitalize your business, but you still might be right for angel investing or loans or debt.

36:49
whatever other type of capital you can add to your stack. But that isn't a very important thing to know. And again, something we educate in our platform for founders, it's not always clear to founders what is the right path or how to understand the venture capital business model and why it requires scalability to be viable. Exactly. And I love that you are all encompassing at Scroobious,  right? It's equitable capital access.

37:18
So not all businesses are venture capital, subject to venture capital. All right, so that's amazing. My last question, did you have fun in the sandbox today? Absolutely. I do love that question. We build humor into everything we do. I think humor is just a critical element of building. And if you're not having fun, what are you doing?

37:46
You have to be able to have fun. So yes, thank you for making a fun podcast experience. Thank you, Allison. So to my listeners, if you liked this episode with Allison Byers, CEO and founder of Scroobius, sign up for a monthly release of the Founders Sandbox where founders, business owners, corporate directors and professional service firms provide stories on how to build with strong governance a resilient, scalable.

38:14
and purpose-driven company to make profits for good. Thank you for joining me, Allison, and until next month. Thank you so much, Brenda. That was fun.