How to Fund a Teen Startup
by Daniela Schwartz
If there is anything that has become certain, it’s that teens are capable of producing life-changing accomplishments. A 16 year old from Maryland created a test to diagnose pancreatic cancer that is faster than any previous test. A 17 year old from England sold an app to Yahoo for 30 million dollars. But what does each ambitious entrepreneur have in common? They all need funding to begin their missions.
Elix Incubator has made significant progress considering that it’s only eight months old. In their first months they’ve already launched six social ventures, an admirable accomplishment in the eyes of any entrepreneur.
To top that off, on March 4 the company was awarded first place in California and for the University of Delaware Diamond Challenge, an internationally-acclaimed venture concept competition for young entrepreneurs around the world. As also international semifinalists, Elix will be competing in Delaware this April at the international finals of the competition. The company has received thousands in grant money for this achievement.
Yet, despite this early success, the company has felt the same financial pressures that every emerging company goes through.
“The truth is, Elix is in phase one of fundraising for social enterprises,” Isabella Liu, Elix Incubator’s Founder and CEO, said. “I’m not ashamed of that simply because we never gave up.”
Stash Pomichter, Elix's CFO, said that the company originally hoped to raise their capital through investments and grants, but after submitting many of applications and receiving little response, the team realized that had to step back to square one.
“Originally, we were expecting more interest from investors, but being high school students it’s exceedingly challenging to secure substantial seed funding,” Pomichter said. “We’ve found that sometimes desperate times do call for desperate measures, and there are many things we can do to raise money.”
To gain financial support in a more modest way, Elix looked to their community. According to Liu, having the community support her was actually really powerful because it united everyone in pursuing a similar goal.
“In the past, I think it was a matter of pride where I really did try to do it [funding Elix] like I was launching the next Facebook or Twitter, but launching a social impact incubator for teens is not like launching a social media company,” Liu said. “Humbling myself to realize that was a big change that I made.”
In February, the entire Elix staff set out with pamphlets in hand and scripts rehearsed to ask local neighborhoods to support their business. In just one day, the team raised more than $2,000.
Since then, the company has made tremendous progress. In just three weeks, the company has raised thousands. This is partly from their door-to-door fundraiser, but also from investors.
The community support the company’s received was used as a platform to reach out to venture capitals and other grantees. The 1517 Fund, a Peter Thiel backed venture capital firm, gave Elix a grant of over $1,000 of seed money and over $5,000 of Amazon Web Service credit to continue their online presence. Isabella said that persistence was a key player in getting that specific grant.
It isn’t easy for teenagers to break through into the business world, so dedication and not giving up are others factors that the Elix team has woven into their mentalities.
“What’s frustrating is that whenever you tell an adult ‘I’m trying to raise 100,000 dollars’ they say ‘That’s nothing, that’s a rounding error for most venture capitalist firms,’” Isabella said. “Then I ask them for help in raising $100,000 and they say ‘I actually don’t really know anyone who would be able to make that happen, but good on you for trying.’ Conceptually, raising $100,000 shouldn’t be that hard, but in practice it’s very difficult to break into the world where $100,000 is a rounding error.”
However, at the pace that Elix is at now, making it to their goal of $100,000 by 2018 is looking increasingly possible. In addition to cementing venture capital connections, Elix is finalizing grants for $100,000 with both the Redwood Credit Union (RCU) and the San Francisco Credit Union. The responses so far have been encouraging, especially from the RCU. In fact, Pomichter received a promising email just days after submitting the application from a RCU Board Member. Things are looking up for Elix.
The young entrepreneurs know that their goals can only be met with combination of a ruthless focus and work ethic. Nonetheless, emboldened by their recent successes, the team is ready to outwork, outthink, and out-hustle anything that comes their way.