#StartupsEverywhere Profile: Allison Byers, Founder & CEO, Scroobious
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Overcoming Early-stage Barriers and Empowering Founders for Success
Scroobious is an online platform and community connecting early-stage founders to investors and partners. Their Pitch it Plan™ provides founders with unique resources and tools for success throughout the pitching process. We spoke with Founder and CEO Allison Byers on how her platform has explored underrepresented founders’ challenges in the startup ecosystem, what it means to be both a mother and an entrepreneur, and how policymakers can better support the tech ecosystem.
Tell us about your background. What led you to Scroobious?
To give a proper overview of my background and entrepreneurial journey, I have to go back in time, starting with when I became a mother. I am a strong believer of the “mom tax,” which is imposed by employers who make it impossible for women to remain in their positions or companies. I stayed home for four years after having my child, and I personally had a very difficult time. The decision had an enormous impact on my own ability to be an entrepreneur because I missed out on four years of crucial startup and team building. When I was re-entering the workforce, I wondered what I was going to do now that I’ve missed four years of work experience, and how I was going to balance a new career with being a mother to two very young children.
Entrepreneurship ended up becoming a very good option for me because it allowed for flexibility. I began part-time by working with scientific co-founders to translate their clinically-validated IP out of MIT and a large hospital system into a commercial entity. I joined the team to incorporate the company, negotiate IP agreements, implement operations, and basically handle all things business. I quickly joined full-time and ultimately co-ran the company and served on the board of directors. At that company, I raised almost $10 million over the course of five years—just enough to earn FDA clearance because of how capital intensive the approval process was. It was that fundraising experience that defined my next endeavor.
The biases and challenges I faced in fundraising and pitching to dominantly male investors really caught me off guard. It was unlike any bias I had experienced before. When that company was acquired, I spent a lot of my time researching if my fundraising experience was typical, and if the problems I faced were shared by other women or people who have non-traditional backgrounds in the startup space. I found many statistics that ultimately confirmed that these issues were widespread. For example, funding to female founders fell to 2.3 percent in 2020 from 2.8 percent in 2019 despite a record amount of VC investment. Black and LatinX founders have raised just 2.4 percent of total venture capital funding since 2015.
I started to think of ways I could use my background in technology and data to address this issue. I saw two very clear needs when I did my market research. The first is founder education, particularly in how you pitch a venture or idea so that it is compelling to your investor. Contrary to popular opinion, I’ve learned it is not intuitive to think like an investor. If you're a first time or non-traditional founder who doesn’t have a well-established network, it is intuitive to sell the idea as if you’re selling a product to your customer. This approach is entirely different from selling the opportunity to invest in your company. I could not find a program that was accessible and affordable for those who wanted to learn the correct approach. Stifled innovation because of blocked access to pitch education leads to huge economic losses and furthers issues of inequality.
Seeing this, we started a program called the Pitch It Plan, a web app and platform that includes micro-lessons and templates, as well as personalized human feedback, to simplify the fundraising process for new founders. For example, building a bottom-up market size is traditionally seen as scary and intimidating, but in reality, anyone can do it. Our program includes a lesson plan that guides a founder through the step-by-step process.
We launched our minimum viable product (MVP) of this platform a year ago and we’ve worked with a little over 250 founders. On the other side of the market, we are currently building an investor discovery platform where we will curate pitch material for more effective matching of opportunity to capital.
How can policy makers better support underrepresented founders or direct investment towards them?
There have been policy changes to the definition of “accredited investor” that allow for more people to directly invest, as well as changes in crowdfunding regulations that allow for larger raises. In addition to crowdfunding, we’ve seen a fluidity of capital in the private markets and new vehicles for investing proliferate in the past couple of years. This is all encouraging, but it’s new territory and the dollars still aren’t flowing to those from underrepresented segments in equitable proportions. Some of these platforms are marketing to founders that they can easily raise like never before. The truth is that you still have to seed your crowdfunding campaign with money from your network, which is essentially still “friends and family." The same discrimination happens against most innovators as many ideas do not reach the capital needed to make them more appealing to investors. Government funding for tech companies is hard to come by and non-dilutive funding or grant funding such as Small Business Innovation Research (SBIR) grants are difficult to obtain. Policy plays a key role in directing meaningful capital to eager underrepresented founders to help them build their prototypes and get some initial traction.
The other side of this issue is that we need more people from diverse backgrounds writing checks. There's a really strong psychological principle known as in-group favoritism where you are more likely to see someone with a background similar to yours as competent. Unless you have people who can write checks who are similar to you, you will be seen as less competent than the matching demographic to the check writer. In relation to checks, I am also in strong support of angel investors as an asset class. Angel investors are much more likely to be women or people of color and are more likely to have different investment requirements and time horizons for when they would want a return. However, the issue is that the checks are smaller and there is no good way for angels to find other angels to ally and pool their capital with. There is also an access to education problem in the sense that people don't even realize that they can invest or that they are accredited. On both sides, there needs to be some policy that expands the ability to provide capital to people who could write a check without having to become a fund manager; this way, those who need those small checks have a fighting chance of getting something done.
You’re in a unique position in the sense that you’ve worked with many diverse founders. Have you come across any other challenges that founders of color and women founders have faced while raising seed money?
To answer the question, I have to cite the ingrained bias in investment, and the inability for an investor to appreciate the size of the market due to a lack of experience with the problem or access to a network that would have first-hand experience with the problem. Regardless of how many deals or data a founder could show, venture investors struggle to see the same vision and accept that the potential market size could be enormous because they don't accept an issue exists in the first place. This is mainly because most founders are pitching to predominantly white males.
I wish I had my own platform to use right now because I know there are millions of angels that would see and share our vision. Every founder I work with is hunting for these investors who will appreciate the opportunity and the size of the market that they're presenting. The good news is that our community of 250 founders, 88 percent of which identify as BIPOC and 63 percent of which identify as women, are starting to solve many of these problems related to barriers to access.
Are there any other topics that policymakers should focus on to better support the tech ecosystem?
An area that I am very passionate and outspoken about are mother entrepreneurs. Not having childcare is an enormous hamper on my business and its growth. That's a problem unique to mothers for the most part, and it has been taking a toll on them. Recent data has surfaced showing that one-third of working mothers have had to leave their jobs since March of 2020. Any legislation that assists mother entrepreneurs, be it through childcare or business credits for working mothers, could be incredibly powerful. If I didn't have to worry about how my kids were going to get to their activities at 3:30 today, I could be so much more productive.
Funds, traction, and momentum are strong signals investors consider during diligence. I incorporated Scroobious in January of 2020, one month before COVID. When the epidemic struck, my kids were suddenly at home all the time and my daughter was in kindergarten, just beginning to learn how to read. As with many working mothers who make less than men due to the gender pay gap, my husband’s job immediately took precedence because we rely on his salary and I had to put my business to the side while we coped with the education and childcare demands of the pandemic. When it comes to drawing investors, there are a number of companies that were incorporated at the same time as me that have made significantly more progress and momentum. During my company’s evaluation, investors do not pay attention to how I could not work for a year or had to work very restricted hours. When they see that our two-year company has less revenue than others they compare us to, they take it as a negative signal, when in fact it is not an even comparison and is not indicative of potential.
Policymakers could consider developing grants for mother entrepreneurs who have been hampered by COVID-related issues. If given appropriate funding, we are proven to outperform, which would be a boon to the economy and the tech ecosystem.
What are your goals for Scroobious moving forward?
Moving forward, my goal is to keep growing the company and develop an innovative recommendation engine that has the potential to actually get dollars into the hands of overlooked founders who are capable of leading the innovation that will bolster the economy. We need to emphasize the human element of investment decision making, similar to how you all are using storytelling in public policy and advocacy. If we don't help founders connect on a human level with investors, they're not going to get that investment. Building this engine will be time-consuming and complex, but I’m motivated that Scroobious will open doors for many diverse founders to obtain capital they would otherwise not have access to.
All of the information in this profile was accurate at the date and time of publication.
Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email advocacy@engine.is.
