Meet STEP Capital:
Shruti Shah and Ryan Smith were co-founders of a company called Move Loot, a startup that they founded with two other co-founders in 2013. The business was an online marketplace for used furniture where Move Loot would store the furniture from the seller until a buyer purchased it. This meant that for the organization to scale, the company was going to need to invest in infrastructure to grow and as such, they needed a lot of outside capital to run the business. So, like many Silicon Valley Startups, they decided to take venture capital to be able to grow their business. However, as the business grew, it became increasingly apparent that it was going to be difficult to sustain our growth rate without a lot more capital, and with more capital came more expectations about the size and rate of return.
Fast forward a few years and Shruti was working as an Entrepreneur in Residence at Silicon Valley Bank where she had the opportunity to meet and work with hundreds of entrepreneurs from across the globe. Many of them were struggling with the same dilemma over funding - they needed the funding for the business to grow, but were concerned about what might happen if they couldn't grow at the rate that venture capital demanded. Moreover, many of the businesses I came across had revenue and while the strategy of not being profitable for 10+ years might have worked for Amazon, a lot of founders seemed concerned that this might not work for there business.
After a lot of research and conversations with founders, the idea for the STEP fund was born. STEP stands for Sustainable Tech Enabled Products, and the goal of STEP is to provide founders with an alternative form of capital for startups. The goal of STEP is to get liquidity for investors sooner, through a revenue share, while also making sure founders hold on to a larger percentage of their business.
There are a few different structures that we are working through at the moment, but we would love your feedback. We are planning to raise a fund in the next year and start investing but we want to validate this idea through a wider network of founders and begin building a database of founders who would be interested in an alternative model.
You can fill out the survey here: https://stepcapital.typeform.com/to/FypKZL