On an early December morning, Derek Canton woke up at 5 a.m. He was in a hotel on a business trip to California, overseeing the installation of his company’s software in a restaurant.
Half awake, the 29-year-old Worcester native started scrolling through Instagram. As he passed over memes, vacation photos, and fitness ads, he stopped on a post from Forbes. The magazine had just announced its coveted “30 Under 30″ list.
Clicking on the food & drink category, Canton saw a group of headshots. “I was like the third photo down,” he said, a beaming smile creeping across his face as he recalled the moment. “I just broke into tears.”
For Canton, who considers himself “the unlikely founder,” the magazine’s recognition of his startup’s impact in the restaurant industry was a validating moment after years of uncertainty.
The story of a 20-something in the Boston area innovating in tech is a familiar one. But many entrepreneurs enter the field with certain advantages and safety nets.
“I didn’t go to an Ivy League, I wasn’t born with a silver spoon, and I wasn’t groomed for entrepreneurship,” he said.
It wasn’t until he attended college at Worcester State University and won an entrepreneurial competition as a sophomore that Canton said he “fell in love with business.”
Jay Mahoney, a retired professor of business administration and economics at Worcester State University, was Canton’s adviser and encouraged him to enter the competition. Mahoney called herself Canton’s “second mother,” and she acts like it, too. Under her guidance, Canton went from a mediocre student to top of his class.
“We talked a lot about what it means to be an entrepreneur, and I think the light went on in his head that ‘this is what I really want to do for the rest of my life,’” Mahoney said.
After Canton graduated in 2015, his parents urged a measured approach. Canton’s mother is a night nurse from French Guiana, and his father is a project manager from Saint Croix in the US Virgin Islands. They had worked hard to provide a financially stable life for Canton and his two brothers.
“My parents were like, ‘You have to have a job. You can be an entrepreneur, but you cannot be a starving entrepreneur,’” Canton said.
Canton landed a job at Dell, consulted on the side, and lived with his parents to maximize his earnings. After two and a half years, he had enough money saved to launch his own venture; he just needed the right idea.
While participating in a 2017 financial tech hackathon for innovation in payments, Canton started brainstorming.
There were already contactless payment options available at many restaurants, but he recognized a gap he could fill.
“Even though it’s easy for us as a consumer to pay that way, it’s really hard for merchants to accept those types of payments without having to completely overhaul their payment architecture,” he said.
The idea of Paerpay was born: It would be a software add-on to a restaurant’s in-house payment system that allowed users to scan a QR code, pay for their food, and split their check as many ways as they wanted using whichever form of payment they preferred, without having to wait for a server or deal with a specific restaurant’s payment rules.
Paerpay’s target clients are mid-sized restaurant chains, like Steak ‘n Shake, that are large enough to integrate the software, but small enough to be priced out of a point-of-sale system revamp from major players like Clover and Toast.
“It is expensive to upgrade your point of sale system,” said Stephen Clark, president of the Massachusetts Restaurant Association. Clark added that because customers can become frustrated when waiting for their check, “the natural evolution is to pay at the table and expedite that process.”
A few months after the hackathon, Canton quit his job and took out $20,000 of his savings to launch Paerpay. For the next two years, Canton struggled to find investors while he lived off what remained of his savings.
“I didn’t really know how to [raise additional capital],” Canton said. Turning to friends and family wasn’t an option because he didn’t know many people “who could write those types of checks.” It wasn’t until pitching to Boston-based Launchpad Venture Group that Canton got his first outside investment of $15,000.
He had raised $300,000 by March 2020, when the Paerpay app was set to launch at the New England Food Show. But when COVID-19 hit and restaurants shuttered their doors, Canton knew he had to pivot to keep his company alive.
He expanded the service to takeout and drive-thru orders. Paerpay also became app-less because Canton realized most consumers “hated downloading apps,” especially “if you’re a tier-two or tier-three brand.” When users scan the QR code with their phone now, their bill comes up through a web browser.
Over the phone, restaurateurs who use Paerpay input the customer’s phone number into the system. The customer then receives a text with a link to the Paerpay website where they can check out before picking up their food.
For Canton, Paerpay is ultimately about increasing efficiency. “You can pay how you want, where you want, and get your customers in and out faster in a way that doesn’t actually change your payment architecture,” he said.
The startup has 10 full-time employees and raised $3 million in March, bringing its total funding to $4.3 million.
According to CrunchBase, Black founders raised just 1 percent of all venture capital money in 2022. Canton said he’s been intentional about seeking investors who want to support Black-owned startups, like the MassMutual Catalyst Fund and Elevate Capital. And he has been mentoring other young, Black entrepreneurs.
Dieumerci Christel, the founder of Enlightapp, an education app, is one of his mentees. Christel and Canton connected through a Future Founders fellowship.
“It’s very inspiring because you grow up trying to find role models,” said Christel, 24. ”It’s really hard sometimes to see [Black entrepreneurs], because a lot of us are very hidden in these spaces.”
Though Paerpay still has a ways to go, Canton dreams of a future where people who look like him in the startup community aren’t as rare, especially in Massachusetts.
“I’m in this not for me to get rich,” he said. “I want to create generational wealth and lasting change.”