Joah Spearman has built a business with global reach.
He is CEO and co-founder of Localeur Inc., an Austin startup that connects travelers with locals around the world to find cool places to eat, shop and hang out when they visit. It is now available in 188 cities, most recently adding the Kenyan capital Nairobi and Marrakech, Morocco.
Spearman said Localeur is generating six figures in annual revenue. It has raised nearly $5.5 million and served more than 5 million travelers since Spearman and Chase White started the business in 2013. Yet despite those signs of traction, Spearman has run into barriers time and time again when seeking venture capital.
Spearman compared his initial search for funding, from roughly 2014 to 2017, to an endless string of flights between New York, San Francisco and Los Angeles — hundreds of pitch meetings blurring together as he fielded questions from investors who wondered, how long will this local trend last in travel?
"Not only did I not get funding but the bigger hurdle was I encountered a lot of vanity meetings — investors wanted to meet with me so they could feel good, so they could say, 'Oh, we've met with Black founders.'"
Spearman decided to shift his focus from institutional investors to angel investors, hoping he could connect with them on a more personal level. That approach has paid off with more than 100 angel investors in the company. He found backers among trailblazing Austin executives, including Heather Brunner, CEO of WP Engine Inc. and Spearman's former boss at Bazaarvoice.
"Having someone like her as my boss gave me a line of sight that there are people who understand my journey is not going to be the same as the journey of a white male founder, even with the same metrics," Spearman said.
Flash forward to late 2019, when Spearman began toying with the idea of pivoting Localeur from a free service to one based on subscriptions. A few months later the pandemic hit and the bottom fell out on international travel. Spearman made the leap, recently killing the free Localeur app and going all in on a web-based subscription model, which costs travelers $8 a month or $100 for lifetime access. Localeur will continue to do deals with other businesses as well; past partnerships have been with JetBlue Airways, Match.com and Nike.
Spearman originally expected to grow revenue 200% this year but significantly tempered expectations once the threat of Covid-19 materialized. He did not disclose actual figures but still expects to see revenue in the mid-six figures, and he is very optimistic about the money coming in from subscriptions.
Localeur used to sign mostly annual deals, resulting in uneven cash flow. Now, with the subscription service, monthly recurring revenue has gone from nothing in June to "near five figures" in October, Spearman said.
The CEO feels the extra hurdles he has surmounted with Localeur have made the company stronger. He's made do on a shoestring budget. He's found investors and advisers who are invested in his success beyond just his return for their portfolio. And his new vision to appeal to a smaller but more loyal customer base is already paying off.
"We're focused on helping people unlock the best of the cities they visit, beyond their accommodations and how they travel there," he said. "Post-Covid, we're positioned to come out stronger than we’ve ever been."
Chris Shonk, Localeur's very first angel investors and now managing director of ATX Venture Partners, feels the same way. He wrote in a recent LinkedIn post: "Localeur made one of the most thoughtful and decisive adaptations I’ve seen when COVID first appeared. It’s because Joah Spearman knows his customers/audience to a cellular and essence of consumption level. 'Grit' is an over-used buzzword mostly by investors to rationalize making decisions where quantitative data is scarce and ambiguity rampant. 'Grit' for founders is somewhere between obstinance and vision because they know and clearly see something that others can not yet recognize or measure."
Spearman encourages other Black entrepreneurs to court angel investment like he did, and to approach pitch meetings with honest expectations.
"Whether you went to an Ivy League or ... didn't go to college, the whole spectrum, you are still far less likely league to receive institutional VC than a white founder, whether they graduated from college or not," Spearman said.
He's working to break down that prejudice, growing Localeur into its next phase and speaking out about the racial inequities in the current startup ecosystem.
