Editor’s Note: The past few weeks, Rhode Island Inno began its in its “Bootstrapping in Rhode Island” series, where we heard from different entrepreneurs who raised their own funds (without venture capital) in the Ocean State. Here’s part one, part two and part three. Today, we’re highlighting the perspective of another Rhode Island bootsrapper, Adam Alpert of Pangea.
Finding funding in the Ocean State can be a daunting task, with the number of venture capital firms and angel groups few and far between.
But startup founders, as they are often forced to do, have taken this disadvantage and turned it into a strength, making Rhode Island an ideal place to bootstrap. That's according to Adam Alpert, co-founder of the app Pangea; it's a platform that helps startups hire college students for projects and internships.
The Ocean State may not be able to boast the same glamour of startup life in neighboring Boston and New York City, but that also makes it a much cheaper place to live in.
“This allows us to keep our burn low and extend our runway,” Alpert told Rhode Island Inno. “The general under capitalization of the ecosystem from a VC perspective means that founders here a have little choice but to approach their businesses with a lean mentality.”
This lean mentality has allowed Alpert and his team to take Pangea at its own pace and validate its assumptions cheaply, which has paid off in the long run.
As a digital marketplace, Pangea fell into a category of startups that often needs to pursue outside capital in order to scale.
"We know that in winter, which can be harsh here, the lone wolf dies, while the pack survives.”
But because of the inherent risk of marketplaces, where you essentially need to build an audience up on both sides of the spectrum, Alpert said the company determined that it would be better to develop its model and strategy at a smaller scale in order to validate its proof of concept.
The Pangea app was not created with a huge product build out, but rather with some old fashioned contracts and a bunch of emails. The company found a cheap way to run tests around certain key hypotheses and thus lowered it capital requirements.
“One misconception about bootstrapping is around this notion that raising funding equals success,” said Alpert. “Some people feel that if you haven’t raised funding then you aren’t successful, but I feel that there are more important KPIs than funding raised and valuation. At Pangea.app, we measure success by the number of matches between students and startups, and positive outcomes of those matches.”
And the more time a startup takes, the more traction they can build early, which is more appealing to a venture capitalist, and also more indicative of where to deploy capital once you eventually have it.
“Another really important insight was knowing that how we would spend a dollar today might be very different than how we would spend a dollar six months from now,” said Alpert, a graduate of Brown University, who participated in Brown’s summer venture accelerator. “The longer you can wait to raise funding, the more impactful you can ultimately be with that capital. We are very glad we’ve taken this route.”
Alpert said he eventually expects that Pangea will go out to raise funding, but he has found it extremely beneficial to bootstrap thus far, considering Rhode Island has a deep bench of universities and talent, and that most startup founders are in the same boat.
“It breeds a collaborative environment of fellow founders who are eager to help each other out,” he said. “We know that in winter, which can be harsh here, the lone wolf dies, while the pack survives.”
