Business Incubator Series: John Richards, BoomStartup, Provo, Utah (Part 2)

By guest authors Irina Patterson and Candice Arnold

John: I took me a couple years or a year and a half to research and decide what to do. I was going to launch in 2009 but the economy … you know, you start these things for a summer program in February or March.

In February and March 2009, it was the absolute abyss of the economy and the investor sentiment. It was not a good time. Nobody wanted to hear about anything new. They were worried about their stock portfolios. So, I put it off for 2009.

I felt much better about it going into 2010, so we launched for the first year in 2010. Another angel investor in the area was thinking of doing the same thing, so he and I got together and co-founded it together and launched in 2010. It went really well. His name is Robb Kuntz.

Irina: So, you’re the co-founder and co-managing partner of this “mentorship-driven investment program?” That’s the term you use, right?

John: Yes. Incubator has a bad connotation among investors and mischaracterizes the significant evolutionary step these new programs represent.

Irina: What is your geographical focus?

John: This year, we got 25% of our applications from outside Utah, even some from Europe. We didn’t choose any of them, but we are willing to take those that will come out for the program here. The first year, we were really focused on Utah. We’re seeing that if others will come out and locate here, we would take them.  In 2010 and now 2011, all of the companies are teams from Utah.

Irina: What is your industry focus?

John: Software, Internet, software as a service, mobile. We have toyed with the idea of taking one non-tech, tangible product but so far, haven’t done it.

Irina: Could you talk about where your 2010 graduate-companies are at so far?

John: Sure. Right after Demo Day, which was September 1, 2010, four of them got funded within a month or two. Really fast, relatively speaking. Another two have been funded since then.

So, we’re six out of ten that are funded. There might be a seventh one here. That’s right in line with the 60% to 70% that you see TechStars at.

A couple of ours were oversubscribed on Demo Day. One or two of them were triple or quadruple oversubscribed. You get that type of thing. Unfortunately, there’re two or three that haven’t been funded and are having a hard time attracting funding. They’re all still in business.

That’s the status of the 2010 [companies]. Some are having more traction than others. Others are doing some exciting things. It’s interesting. We keep up to date with them, continue to mentor them and talk to them and network with them.

Irina: Is there any particular company that stands out, that you want to mention?

John: One is called Bazari. It’s an interesting company. They’ve always been white hot in terms of investor interest in the space they’re in. They relocated to India.

In India, there’re about 200 microfinance institutions. They help disadvantaged people get microloans to become micro-entrepreneurs.

So, Bazari went in with their first hypothesis for a business idea that they were going to help these borrowers be able to set up mobile commerce businesses through text commerce, through SMS messages, where they could sell items through SMS. It’s called T-commerce.

That’s a good idea. For instance, there are 200 micro finance institutions active in India alone. The top two are very large companies. They’re public, billion dollar companies. They make high returns on these loans. One of the companies is called SKS, and they have seven million borrowers. So, Bazari set off to do text commerce with these borrowers and help them.

In two trips to India, during the program in 2010, that they took, they pivoted substantially. They learned that the micro finance institutions, before they could help Bazari reach these borrowers and set them up with the ability to be entrepreneurs through their cell phones, they had to get more organized themselves with field agents and the borrowers giving reports back to the lending institution.

There’s a great need for platform software that allows the villagers who are getting loans and the field agents to be able to report back to the home office in Mumbai or wherever it is. Their process at the time was taking two weeks.

The way it worked was the field agent got the reports, went and found a computer, burned a CD, and then put it through the postal system and mailed it in, in order to report on the loans and the payments and how the borrowers were doing.

So, Bazari pivoted and went upstream and said, “Let’s supply the software platform for these microfinance institutions.”

This segment is part 2 in the series : Business Incubator Series: John Richards, BoomStartup, Provo, Utah
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