Tony Longo and Dan Adams weren’t having an easy time raising money for their Boston mobile startup, CO Everywhere. Longo estimates that he attended about 200 meetings with local venture capital firms. None said yes.
Many didn’t say no, either. They simply didn’t return phone calls or e-mails. “You’d have a good meeting and maybe a second meeting with more of the partners at the firm, but then things would just go dead,” says Longo. “It’s really discouraging.”
Over the summer, they started talking with their families, and prospective hires, about possibly moving the company to California. Longo was out there for a week in July, and found the investor response encouraging. Boston investors simply didn’t have a track record of successfully backing mobile startups that built products for consumers, not businesses, Longo concluded.
Plenty of Boston-bred entrepreneurs have made that move west — among them the founders of Facebook, Evernote, and Dropbox. And plenty of entrepreneurs give up trying to raise money well before they’ve met with 200 investors. But the story of CO Everywhere is different.
Longo started the company in 2012 as Block Avenue. His goal was to gather information and reviews about every block in the United States: What was the crime rate, how close was public transit, and were the public schools and restaurants any good? Block Avenue assigned a letter grade to each block, from A to F. Longo hoped to make money from ads on the site and by licensing the information Block Avenue collected to real estate sites or brokerage firms.
Longo raised several hundred thousand dollars from individual “angel” investors in Boston. But many of the venture capital firms he spoke with worried about how often people would need the information Block Avenue supplied.
“It seemed like a website you might visit once a year, when you’re moving into a neighborhood you don’t know much about,” says Scott Johnson, a partner at New Atlantic Ventures in Cambridge. Johnson tracked the company over the course of a year. “What we want to see is some growth in the user base of a site like this — an indication that it’s catching fire.” New Atlantic decided to pass.
Longo heard similar concerns from other investors, so he decided to make major changes — what entrepreneurs refer to as a “pivot.” He had his small team begin building a mobile app that would display all the photographs and social media conversations about specific places, such as Harvard Square or the Mohegan Sun casino. The app would let you pick a predefined location, or draw a boundary on a map with your finger, and see what people were saying and posting about it on services like Twitter, Facebook, and Instagram. The app also would be able to highlight upcoming events in the area, and special discounts offered by businesses.
Investors seemed to have a more positive response to the new idea. Longo says he met with one VC who used the app to look at his neighborhood and learned his daughter, who has just posted a photo on Instagram, was injured in a soccer game. That meeting still didn’t lead to a deal.
Firms like Wellesley-based Grand Banks Capital may see 1,000 investment opportunities each year, says partner Tim Wright. But Grand Banks invests in only three or four startups annually. “We’re looking for reasons to say no,” Wright acknowledges. One issue for Grand Banks was whether others could easily duplicate what Longo and his team had built.
Last June, Adams joined the company as chief technology officer. He previously worked for Cantina, a software development firm that helped Block Avenue build its product. Out in San Francisco in July, Longo met with Ryan Sarver, a former Bostonian who moved west to join Twitter, but is now a partner at Redpoint Ventures. “I think we’re packing our bags,” Longo told him. “I’ve met with everyone in Boston.”
Block Avenue relaunched in August as CO Everywhere, but still hadn’t raised the money Longo thought it needed to succeed. With about six months of cash in the bank, he was thinking about a second trip to the West Coast. Most of the people who understood social media — and had gotten rich from it — were in California, Longo says.
But no matter how many times an entrepreneur strikes out with investors, “it only takes one to say yes,” observes John Simon of Sigma Prime Ventures in Boston. (He said no to Longo.) “The analogy is to dating. You can meet hundreds of people . . . and date a bunch, before you find the perfect match.”
Longo and Adams had no reason to feel their luck would change on Sept. 30, when they met with Morningside Group, a Chinese investment firm with an office in Newton. But the “first date” led to dinner two days later. Over lobsters and clam chowder, Longo and Adams discussed their vision with the Morningside founder, billionaire Gerald Chan, and his partners. The gathering didn’t break up until midnight.
On Dec. 18, Morningside wired $6 million into CO Everywhere’s bank account. That gives the company about two years to gets its app onto millions of smartphones. The company has six new hires starting Monday, and expects to have about 20 employees by next month.
Making more than a hundred pitches to investors isn’t something most entrepreneurs boast about, but “it is probably more common than people would want to admit,” says Tom Pincince, a serial entrepreneur who runs Digital Lumens, a Boston LED lighting company. “But the thing about real entrepreneurs is they believe in the vision, and they’re going to work on it until they convince someone else that it can come true. If not for that, many innovations just wouldn’t happen.”